Lagarde: Public sector may need to take part in restructuring

Reuters
January 25, 2012

Public sector holders of Greek debt, such as the European Central Bank, may need to take a haircut if a private sector restructuring is not enough to make Greece's debt burden sustainable, IMF Managing Director Christine Lagarde said on Wednesday.

Talks with private sector creditors hit an obstacle on Monday when euro zone ministers rejected their demands for a 4 percent coupon on new, longer-dated bonds in exchange for existing debt.

Greece is desperate for a deal to ensure funds from a 130 billion euro rescue plan drawn up by European partners and the International Monetary Fund arrive before 14.5 billion euros of bond redemptions fall due in March.

Charles Dallara, who negotiates in the name of private bondholders through the International Institute of Finance (IIF), was in Paris to co-chair an internal meeting of creditors on Wednesday to discuss latest developments in the talks.

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