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Both sides see progress in Greek talks

Date: Friday 27 Jan 2012

Both sides see progress in Greek talks

-Both sides see progress in Greek PSI talks.
-Olli Rehn says official sector may need to increase funding.
-ECB no closer to agreeing on taking any losses.
-Greek bankers say they have not heard of a new IIF offer.



Both sides taking part in the negotiations over the degree of private sector involvement (PSI) in Greece see progress in the talks, according to Reuters.

The main bone of contention is whether and to what degree European Union (EU) public sector entities, such as national governments and the European Central Bank (ECB), participate in any agreement. The ‘hair cut’ which will be applied to private sector debt holders is seen depending on the answer to that question.

Interestingly, the EU’s economic affairs commissioner, Olli Rehn, is being cited by Reuters as having said that, "there is likely to be some increased need of official sector funding, but not anything dramatic."

Sources at the ECB on the other hand told the agency that the central bank is no closer to reaching such a conclusion following a meeting late last night.

In last place, Greek bankers and public officials have indicated that they know of no new proposal from creditors, contrary to what published reports yesterday held. According to the latter, private sector creditors were said to now be willing to incur in greater losses on their holdings as a result of the coupon on the new debt to be issued by Athens being set at 3.75%.

Nonetheless, it is a well-known fact that the IIF is willing to accept a coupon of as low as 3.8%, while the EU, IMF and ECB are said to be holding out for a lower one, closer to 3.5%.

AB

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