Wednesday, January 18, 2012

Greek bond swap talks to resume Wednesday

Protesters take part in a rally organized by the PAME Communist-affiliated union as they hold banners with anti-austerity slogans in Athens, Tuesday, Jan. 17, 2012. Strikes and demonstrations over austerity measures hit the Greek capital of Athens on Tuesday, as international debt inspectors returned to resume their scrutiny of the country's reforms. Banner at front reads: "For the crisis, unemployment, poverty, exploitation, immigration...responsible the imperialism. Let's organize, unite and fight..." (AP Photo/Thanassis Stavrakis)

Protesters take part in a rally organized by the PAME Communist-affiliated union as they hold banners with anti-austerity slogans in Athens, Tuesday, Jan. 17, 2012. Strikes and demonstrations over austerity measures hit the Greek capital of Athens on Tuesday, as international debt inspectors returned to resume their scrutiny of the country's reforms. Banner at front reads: "For the crisis, unemployment, poverty, exploitation, immigration...responsible the imperialism. Let's organize, unite and fight..." (AP Photo/Thanassis Stavrakis)

Protesters shout slogans during a rally organized by the PAME Communist-affiliated union in Athens, Tuesday, Jan. 17, 2012. Strikes and demonstrations over austerity measures hit the Greek capital of Athens on Tuesday, as international debt inspectors returned to resume their scrutiny of the country's reforms. (AP Photo/Thanassis Stavrakis)

Protesters take part in a rally organized by the PAME Communist-affiliated union as a Greek flag is seen on a department store advertising banner in Athens, Tuesday, Jan. 17, 2012. Strikes and demonstrations over austerity measures hit the Greek capital of Athens on Tuesday, as international debt inspectors returned to resume their scrutiny of the country's reforms. (AP Photo/Thanassis Stavrakis)

A protester takes part in a rally organized by the PAME Communist-affiliated union as a Greek flag is seen on a department store advertising banner and reads ''I love you Greece...'' in Athens, Tuesday, Jan. 17, 2012. Strikes and demonstrations over austerity measures hit the Greek capital of Athens on Tuesday, as international debt inspectors returned to resume their scrutiny of the country's reforms. (AP Photo/Thanassis Stavrakis)

A security guard opens the shutters of Syntagma metro station during a 24-hour strike in Athens, Tuesday, Jan. 17, 2012. International debt inspectors visit Athens to review the course of Greece's austerity reforms. Unions call for strikes and work stoppages in some sectors in the Greek capital. (AP Photo/Thanassis Stavrakis)

(AP) ? Talks between the Greek government and its private creditors on a bond swap deal needed to avoid a catastrophic bankruptcy will resume on Wednesday, the investors' representatives said Tuesday.

Charles Dallara and Jean Lemierre, senior officials from the Institute of International Finance, have been leading the talks on behalf of banks and other investment firms. They "reiterated their commitment to seeking an agreement on a voluntary debt exchange for Greece," the institute said in an announcement.

The two "encouraged all parties to work in good faith toward this end with a sense of urgency."

As part of the deal, the private creditors would exchange their existing Greek bonds with new ones of a lower value with the aim of cutting Greece's debt by euro100 billion ($127 billion).

Talks on the deal were suspended on Friday due to disagreement over the interest rate Greece will have to pay on the new, lower-value bonds.

The bond swap is crucial because it is a precondition for a second, euro130 billion ($166 billion) bailout for Greece. The country's international rescuers, the eurozone and the International Monetary Fund, have warned that they will not extend any more support if a bond swap deal is not agreed.

That means Greece could default on its debt in late March, when it faces a euro14.5 billion bond repayment it cannot afford, potentially threatening the entire eurozone financial stability.

The debt relief from the bond swap deal is necessary if Greece is to have a fighting chance to emerge from its debt hole.

Greeks are increasingly angry over the size and scope of austerity measures made to cut debt.

On Tuesday, strikes and demonstrations against government cutbacks hit the Greek capital again, just as international debt inspectors returned to decide whether the country's reforms are strong enough for it to secure the vital bailout.

The inspectors from the European Commission, European Central Bank and IMF, known as the troika, are expected to press the government for faster cost-cutting reforms. Lower-level members of the troika started the talks in Athens on Tuesday, with the mission chiefs due Friday.

Some 10,000 protesters took part in rallies in central Athens over potential pay cuts in the recession-battered private sector. Anti-austerity strikes in the capital disrupted public transport and other services, while journalist unions also launched a 48-hour strike.

Police said a plain-clothed officer from the anti-terrorism division was beaten and seriously injured by a group of about 30 protesters who also took his handgun. The rally was otherwise peaceful.

Under government pressure, unions and employers are due to launch talks Wednesday to explore ways of slashing labor costs.

Meanwhile, Greece saw its borrowing rates ease marginally in a bill auction. Unable to issue long-term debt due to untenably high borrowing interest rates of 33 percent, the country maintains a market presence through regular treasury bill auctions.

The public debt agency said it raised euro1.625 billion ($2.06 billion) in a sale of 13-week treasury bills, an interest rate of 4.64 percent, compared with 4.68 percent in the last such auction in December.

Demand for the bills was 2.90 times the amount on offer, roughly the same as last month.

Associated Press

Source: http://hosted2.ap.org/APDEFAULT/3d281c11a96b4ad082fe88aa0db04305/Article_2012-01-17-EU-Greece-Financial-Crisis/id-6aab3fa780044c189d19f50eeb9e4189

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