Business Insider
February 3, 2012
Markets haven't been paying much attention to Greece lately, as multiple sets of negotiations drag on between the Greek government, representatives of its private creditors, troika officials, and even the European Central Bank.
In case you hadn't noticed, they're not going anywhere. After more than three months of bickering about the scale of a Greek debt restructuring, officials still keep pushing back the date at which they expect to have a deal.
According to sources cited by Bloomberg, a deal to impose more than a 70 percent haircut on privately held Greek bonds and to expand the €130 billion ($171 billion) in loans from the EU/ECB/IMF troika is on the table right now.
That expansion in funding might be caused by a new €15 billion ($19.8 billion) debt hole that inspectors have found in Greece's finances, according to the Irish Independent. At the same time, creditors are said to have drastically toned down their demands, requesting only a 3.6 percent coupon on new bonds issued as part of the swap.
The main issue with the deal, however, appears to be that representatives of the banking sector won't come to an agreement with the Greek government without assurance that the ECB will take losses on its €50 billion ($65.8 billion) holdings of Greek bonds. At the same time, the ECB—which appears to be considering haircuts now despite previous rejections—won't come to any sort of decision on their losses until the private sector has made a deal.
What a catch-22.
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