1.30pm: A proposal from Europe's banking sector to roll over some of Greece's debt have hit the wires. Here's the detail....
A plan obtained by Reuters appears to show the private sector making a €17bn contribution to a new rescue package for Greece. This would involve banks swapping their existing loans for new bonds that would not mature for 30 years.
The proposal comes from the Institute of International Finance, which represents around 400 banks. It has calculated that Greece needs another €173bn over the next three years, with €28bn coming from privatisations and €58bn still to come from its original bailout.
That leaves €88bn to be found from somewhere. And that's where the IIF comes in....
The document apparently explains that private investors now hold some €150bn worth of Greek bonds. If 90% of these investors take part, €135bn could be rolled over by banks buying new 30-year bonds. The IIF suggests that some investors could take a 10% haircut, in return for a higher interest rate - 6.16%, versus 5.25% for investors who rolled over 100% of their existing loans as they mature.
In return, the IIF wants:
.a credit enhancement from the official sector, whereby the full principal for new bonds exchanged or committed under the proposal would be guaranteed through AAA quality zero-coupon bonds.
This sounds very similar to a proposal from the French banking industry last month, which was rejected because it involved Greece defaulting. The ECB, though, may have lost that battle.
The bottom line, according to Reuters, is that the private sector would take a €17bn hit, leaving Eurozone governments and the IMF to provide another €71bn.