A deal between private creditors and Greece appears to be getting closer to being done according to Olli Rehn, the EU’s monetary commissioner. Discussions between the two parties have been going on for a while now as they figure out how to swap shorter-dated bonds for new, longer-maturity ones. Many analysts believe an agreement must be done in order to avoid a messy default.
Rehn said he believes a deal will get done, “The next three days will be very crucial for that future … three years,” he said.
“In other words, we are just about to close a deal on the private sector involvement between the Greek government and the private creditor community, if not today maybe over the weekend, but in any case preferably still in January rather than in February,” he told participants in the debate in Davos hosted by CNBC.
The main sticking point in negotiations is with the coupon on new, long maturity bonds. The IMF and EU want it low enough so Greece’s debt will fall to 120% of GDP by 2020. It is currently at 160% of GDP.
The EU and IMF are also pressuring Greece to make more cuts to its bloated budget to ensure it gets another bailout.