Greece’s creditors are pushing back against an International Monetary Fund (IMF) drive to get them to accept larger losses on the country’s sovereign debt, with one Madrid-based hedge fund pulling out of the debt swap talks over the matter.
Holders of Greek sovereign debt are holding out for coupons of 5% on 70 billion euros ($91 billion) of new bonds the government will issue in return for existing securities, Bloomberg reported. But the IMF is urging them to accept a smaller coupon so that Greece’s debt-to-gross domestic product ratio can be cut to 120% by 2020, according to people familiar with the discussions.
Such an arrangement was a key element of the agreement reached by European Union (EU) officials on Oct. 27. The IMF said on Dec. 13 that without such a write-off, Greece’s debt will rise to almost twice the size of its entire economy in 2012.