Greek debt restructuring talks collapse

Talks to address the restructuring of Greek debt have collapsed, edging the eurozone closer to a default by one of its members and placing the risk of a break-up back in the spotlight.

Government negotiators and the country’s private-sector bondholders were meeting today to determine the terms of the deal, which is likely to take the form of a 50% haircut on Greek bonds’ face value.

However, the talks have been put on hold after the involved parties failed to reach a “constructive consolidated response”.

A statement by the Institute of International Finance (IIF) – which was negotiating on behalf of financial institutions holding Greek debt – says: “Under the circumstances, discussions with Greece and the official sector are paused for reflection on the benefits of a voluntary approach.”

The talks are essential for the country’s bailout. An agreement on the restructuring of Greek government debt is needed before the International Monetary Fund and European Union will release the next tranche of support.

The IFF adds: “We very much hope, however, that Greece, with the support of the euro area, will be in a position to re-engage constructively with the private sector with a view to finalising a mutually acceptable agreement on a voluntary debt exchange.”

Greece face a €14.4 billion (£12 billion) bond repayment in March, heightening the pressure for the government and its creditors to come a deal. Unless an agreement is reached, the country will have to pay the full amount or run the risk of defaulting.

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