FRANKFURT (MNI) – Private creditors expect to reach a debt swap
deal with Greece within weeks for a 50% haircut on privately-held Greek
sovereign bonds and then to proceed with an actual exchange of bonds
early next year, Institute of International Finance (IIF) Managing
Director Charles Dallara said Thursday.

“We hope to find an agreement with Greece within weeks,” Dallara
said after a meeting with Greek officials at which a creditor committee
was formed. The IIF is a global association of banks, which is
coordinating the negotiations between Greece’s private creditors, the
Greek government and EU officials.

A pre-condition for the actual debt exchange would be finalisation
of a second bailout program for Greece, the IFF’s Deputy Managing
Director Hung Tran said. Eurozone leaders agreed at their October 26-27
summit to provide E130 billion worth of new official sector bailout
money to Greece in exchange for additional measures by Athens to cut the
budget gap and rein in the public debt.

“A key benchmark for this process is the negotiation and approval
of the second rescue programme for Greece. This programme contains the
necessary funding for the official sector to help recapitalize the Greek
banks,” Tran said.

Should this be concluded successfully, the IFF expects a debt
exchange to take place in January 2012, Tran continued.

Dallara would not disclose potential details of the debt exchange
at the current time, but he said he did not “envisage a broad range of
options this time,” as had been the case following the July 21
agreement. The July 21 plan, which never saw the light of day, contained
four different options for banks to choose from.

“I hope to concentrate on a more limited range of options,” Dallara
said, noting that this should make the process more efficient.

Dallara was optimistic about a large-scale participation by private
sector creditors, hitting the target of 90% of privately held Greek
debt.

The members of the creditor committee formed today hold about 70%
to 80% of private Greek debt, Dallara said. “We could speak with direct
confidence of 70% to 80%…I can easily imagine a situation in which
participation is very, very high.”

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