Brussels (Reuters) - the main consideration for the Greece option now is a voluntary agreement by investors to hold their assets Greek bond during the period of another program EU and the IMF from 2011 to 2014, said sources in the euro area.
"Since Monday which is the main option review,"a source with an overview of the discussions on Greek debt said, referring to the meeting of Finance Ministers Monday zone euro.""
"Anything,"soft"or"hard", in terms of debt restructuring that could possibly trigger a credit event, off the coast of the table, the source said, adding the euro-zone officials had consulted of the rating agencies on what action triggers a credit event.
A credit event would require the payment of credit default swaps (CDS), instruments that offer investors to insurance against default.
A voluntary agreement with the investors could be part of a new Greek and austerity package of reforms and more EU/IMF funding from 2011 to 2014, said the source of the euro area. "We hope to have an agreement by the end of June," said the source.
The source pointed out that such an option would include not only of not to sell the positions of the banks in Greek debt, but also in fact buy some Greek bonds to replace the questions which have evolved over the duration of the program.
The current Greek program, under which Athens is to obtain the 110 billion euros ($155 billion) in emergency loans was agreed in May 2010, for three years. But the Greece took time delay with the reforms and the achievement of the objectives of austerity and is unlikely to be able to return to the markets of the next year as originally planned.
Most market participants believe the Greece finance will force it to restructure its debt at a given time. A Reuters poll last week showed that among the 28 mainly sell-side economists and 15 fund managers, only three thought that restructuring could be avoided.
There is great pressure on the Greece of the euro area to announce additional budgetary consolidation measures, structural reforms and advance quickly with privatization to raise additional funds, said sources.
The Chairman of the Finance Ministers of euro as Jean-Claude Juncker, said Tuesday that as a last resort, if privatization and additional austerity measures do not work, a fresh Greek debt restructuring could be envisaged.
Such soft restructuring, could be the extension of the deadlines of the Greek debt.
"The report, we talked and nothing is decided, would be a voluntary gesture of private bond and would essentially consist of an exchange between the existing and longer-term obligations," said a second source of eurozone with knowledge of the talks.
But the first source said an extension of maturity, even if voluntary, would further reduce its net current value and therefore raise a credit event.
This could be dangerous, the first source said, because it was not clear what reaction chain follow contagion and liquidity in the financial sector.
The first source said that the European Central Bank's position was that in the case of a Greek event of credit that the pay-outs of CDS, the ECB would accept Greek bonds as collateral, with liquidity in Greek Bank in question.
A voluntary agreement to maintain exposure to the Greece would not be a credit event and the European Central Bank would return, said the source.
"It is clear that the ECB believes that the Greece can do without rescheduling the debt, but with more money," said a third source eurozone familiar with the discussions.
A fourth source also confirms that the main option under discussion now for investors to hold, on a voluntary basis, their exposure to the Greece.
Economic and Monetary Affairs Commissioner Olli Rehn said Wednesday that an agreement for investors to hold the exhibition in the Greece was envisaged.
It would be as in the case of the Portugal, which has to request such an agreement in his plan to rescue of the European Union and the Monetary Fund International.
"We can see if a type initiative Vienna of the maintenance of the exhibition by the banks in Greece could be useful in this context, we will also examine the feasibility of a voluntary rescheduling and I emphasize the word voluntary," said Rehn.
The Vienna Initiative has an agreement of the European Central Bank, the European Bank for Reconstruction and development, regulators and banks with subsidiaries in Central and Eastern as of January 2009.
The initiative, launched at the height of the financial crisis triggered by the collapse of the Investment Bank Lehman Brothers, parents Bank groups means committed publicly to maintain their exhibitions and recapitalize their subsidiaries in countries in Central Europe and Eastern in the framework of the packages of financial assistance from the European Union and the IMF.
Members of the EU, Latvia, the Hungary and the Romania received these packages and IMF data show that the banks within the framework of the initiative commitments have been honoured.
(Other reports by Julien Toyer in Brussels;) Reports by Jan Strupczewski. (Editing by Ruth Pitchford)
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