Greece is in talks with the European Union and the International Monetary Fund on a debt restructuring package, according to The Financial Times.
The scheme would enable Greece to borrow up to 50 billion euros from the European Financial Stability Facility (EFSF), to buy back bonds at about 75% of face value.
Banking sources note that the maturity of Greece’s 110 billion euro bailout loan from the EU and IMF would be extended to thirty years and the interest rate reduced below the current 5.5%.
“Formal contacts on the package are under way but they’re at an early stage,” a banker said over the weekend.
However, such a proposal requires the approval of European leaders and Germany seems against such uses of the EFSF, claims the newspaper.
Additionally, The Guardian said on Sunday: “The European Union is engaged in frantic behind the scenes talks” to reduce Greece΄s debt as international monitors fly into Athens this week.
The newspaper notes that plans to buy back Greek debt at a discount are being given “urgent consideration”. This scenario is called restructuring by stealth by an economist.
The three-stage scheme would allow Greece to purchase Greek bonds owned by the European Central Bank at 75% of their nominal value by borrowing from the European Financial Stability Facility at reduced market rates, according to the Guardian.
Greek Finance Minister George Papaconstantinou has denied that there have been any discussion at the European Union level to extend debt repayments to thirty years, according Dow Jones Newswires.
“There isn’t any official proposal on the table,” Papaconstantinou told local newspaper Ta Nea in an interview.
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