No agreement reached on level of private sector haircuts on Greece’s debt, warns banking body

City A.M. Reporter
NEGOTIATIONS over the extent of the private sector’s involvement in a second financial aid package for Greece have stalled, with no agreement over any elements, the managing director of the Institute for International Finance (IIF) said late last night.

‘There has been no agreement on any Greek deal or a specific ‘haircut,’” Charles Dallara, who is leading negotiations on behalf of the IIF, which represents private sector creditors, said in a statement.

“We remain open to a dialogue in search of a voluntary agreement. There is no agreement on any element of a deal.”

Eurozone states are pushing the private sector to accept a 50 per cent writedown on their holdings of Greek bonds in an effort to reduce Greece’s debt burden by around €100bn.

Failure to agree on a voluntary writedown or “haircut” could lead to a full scale default in Greece’s debt, with a heavy knock-on impact on markets.

Earlier in the day, a European official revealed that the International Monetary Fund (IMF) was pushing for a haircut of “65 per cent or more”, Dow Jones reported.

The IMF could push for a haircut of up to 70 or 75 per cent, reports said, although the international bailout fund did not confirm its position.