ATHENS ? Greece is aiming to complete negotiations on its debt swap deal by the end of the week, the government's spokesman said Wednesday, adding that the talks were at their "most delicate phase."
Charles Dallara, head of the Institute of International Finance ? the body representing banks and other investment firms ? will head back to Athens on Thursday for the negotiations on the bond swap, known as the Private Sector Involvement.
"The target is to conclude the PSI agreement even within this week," government spokesman Pantelis Kapsis told reporters in Athens.
The duration of Dallara's stay in Athens "will depend very much on the outcome of the negotiations," IIF spokeswoman Emily Vogl said.
On the front line of Europe's sovereign debt crisis, Athens is trying to get its private creditors to swap their Greek government bonds for new ones with half their face value, thereby slicing some euro100 billion ($130 billion) off its debt. The new bonds would also push the repayment deadlines 20 to 30 years into the future.
However, the main stumbling block over the past few weeks to securing this deal has been the interest rate these new lower-value, longer-term bonds would carry. A high interest rate could buffer losses for investors, but would also require the eurozone and the International Monetary Fund to put up more than the euro130 billion ($169 billion) in rescue loans they promised in October.
The bond swap is crucial to bring Greece's debt back to a sustainable level. The Eurozone and IMF say a higher interest rate would prevent Greece's debt from falling to 120 percent of gross domestic product by 2020 ? the maximum level they see as sustainable. Without the debt swap, Greece's debt would approach 200 percent of GDP by the end of this year.
"We are at the moment at perhaps the most delicate phase of the negotiations on completing the PSI, and also in formulating the new program for the stabilization of the economy," Kapsis added.
"It is obvious that what happens in the coming days ... will affect the course of the country in coming years," he added.
Separately, representatives of Greece's private sector bondholders were to meet in Paris on Wednesday to discuss the agreement after the EU toughened its demands, a person close to the investors said.
The so-called steering committee of the IIF was to gather for an "important meeting ... to really take stock" of the talks, the person said on condition of anonymity because of the sensitivity of the issue.
The committee represents banks and other investment funds that hold a large part of Greece's debt and are being asked to swap their existing bonds with new ones of a reduced value, longer maturity and lower interest rate.
Eurozone finance ministers decided this week to cap the average interest rate on those new bonds at well below 4 percent. In their last offer, the bondholders said the average interest rate should be above 4 percent.
The finance ministers are pushing for a lower rate because whatever debt relief Greece doesn't get from the investors will have to come from them and the International Monetary Fund, the country's bailout rescuers.
The person close to the private bondholders said the meeting was called for Wednesday because some eurozone officials wanted the deal to be ready for a summit of EU leaders on Monday.
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Steinhauser reported from Brussels.
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