Take or leave. Charles Dallara, the head of delegation of private creditors of Greece (200 billion bonds) reiterated that his proposal at this point is not negotiable. The creditors will not go beyond a 65-70% cut, i.e. the transformation of current securities into thirty-year bonds with an initial coupon of 3,1% and a final coupon of 4,75%. The agreement seemed to have been made on this basis already on Friday, but in the last meeting, according to reports from the Financial Times, the European authorities would have stiffened on a further cut: the final coupon must not exceed 3,5%, which involves a "voluntary" cut of more than 70%.
The result is that the Greek finance minister, Evangelos Venizelos, will appear today at the Eurogroup summit in Brussels without an agreement between the Greek state and private creditors. The agreement was a necessary prerequisite to receive a second plan of international aid of 160 billion euros and thus avoid the default of Athens in March, when a tranche of 14,5 billion Hellenic bonds will mature. The choice whether or not to accept the creditors' proposal is at this point up to the European Union and the International Monetary Fund.
The Greek case is only one of the points that will be submitted to the meeting of ministers of the European Union. We will also discuss the strengthening of the state-saving fund, the European Financial Stability Fund (EFSF), now at 500 billion euros, but of which Italian Prime Minister Mario Monti is calling for a doubling. But it is all in the hands of German Chancellor Angela Merkel, who has repeatedly said she is against this measure.
Furthermore, according to the Financial Times, Germany and France will today ask for a easing of the rules set by Basel 3 to avoid a credit crunch and a further slowdown of the real economy.
