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Greece 'in talks with banks' on extending repayment of debts

Greece is in talks with commercial banks on extending the repayment of its outstanding debt, in line with a similar plan to stretch out paying back its EU/IMF bailout, an Athens weekly has reported.

Fears that the over-borrowed country may restructure its debt after the €110bn emergency funding ends in 2013 are keeping yield spreads at high levels, despite the government's repeated assurances that no such move is on the table.

More than 70pc of Greece's outstanding debt is held in foreign portfolios. The 'Realnews' paper said former European Central Bank vice-president Lucas Papademos, who advises Greek Prime Minister George Papandreou, was handling the talks with banks and funds holding the country's bonds.

"The discussions on a parallel extension of the repayment period of the debt owed to the private sector are being conducted by ... Lucas Papademos, who has been making rounds between Berlin, Frankfurt, London and Brussels recently," the paper said.

It said the plan for a mild restructuring called for a repayment extension of 10 to 30 years, with the focus on paper maturing in 2013 to 2015.

Greece will have until 2021 to repay its €110bn EU/IMF bailout loan, the country's finance minister said last month, after an informal deal reached at a meeting of eurozone finance ministers.

Policymakers hope the move will help dilute fears that Athens will opt for debt restructuring after the three-year EU/IMF funding ends in 2013. An easier-to-service repayment plan can give the economy more time to return to growth.

In November, Mr Papademos said he was against debt restructuring in Greece or in Europe.

Irish Independent