Talks Over Greek Debt Writedowns Stall as Creditors Disagree on Scope of Losses

A committee representing financial firms broke off talks over Greek debt writedowns on Friday after failing to agree with the government on how much money investors will lose in swapping their bonds.

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Greece’s creditors have “not produced a constructive consolidated response” as a group, the Washington-based Institute of International Finance said in a statement today. Discussion will reconvene in five days. Both Greece and the official sector will take this time to reflect upon “the benefits of a voluntary approach,” the group said.

In October, Greek officials and the nation’s creditors agreed to implement a 50 percent cut in the face value of Greek debt in an attempt to reduce Greece’s borrowings to 120 percent of gross domestic product by 2020, but the two sides have not yet agreed on the coupon and maturity of the new bonds, which will determine the total losses for investors.

“The current rescue program doesn’t work and requires a rethink that needs to be done very quickly to keep Greece from defaulting,” said Christian Schulz, a senior economist Berenberg Bank in London. “The risk is high and the stakes are high: that Greece will be let go from the euro.”

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