Ministers said they could not accept bondholders' demands for a coupon of 4 per cent on new, longer-dated bonds that are expected be issued in exchange for their existing Greek holdings. Banks and other private institutions represented by the Institute of International Finance (IIF) say a 4.0 per cent coupon is the least they can accept if they are going to write down the nominal value of the debt they hold by 50 per cent.
Greece says it is not prepared to pay a coupon of more than 3.5 per cent, and eurozone finance ministers effectively backed the Greek government's position at Monday's meeting, a position that the International Monetary Fund also supports.
Jean-Claude Juncker, the chairman of the Eurogroup countries, said Greece needed to pursue a deal with private bondholders where the interest rate on the replacement bonds was "clearly" below 4.0 per cent, stating: "Ministers asked their Greek colleagues to pursue negotiations to bring the interest rates on the new bonds to below 4 per cent for the total period, which implies the interest comes down to well below 3.5 per cent before 2020".
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