Private creditors said on Sunday they had come to the limits of what losses they could concede in a Greek debt swap, putting the ball in the court of the EU and the IMF in a tense race against the clock to avoid a messy default.
Athens needs a deal on the plan, meant to cut 100 billion euros (£82.8 billion) from its debt burden of over 350 billion, in coming days to stay afloat when a major debt redemption falls due in March.
Greece and its private creditors are converging towards an agreement that would see private creditors accepting a real loss of 65 to 70 percent, sources close to the talks said after several rounds of talks last week.
Athens and its creditors have broadly agreed that under the so-called PSI deal, the new bonds would likely feature 30-year maturity and a progressive interest rate averaging out at 4 percent, sources said.
But many details are still unresolved and the plan must also win approval from the IMF, EU paymaster Germany and the other euro zone countries, who insist the deal must put Greece's debt back on a sustainable track.
The offer conveyed to the Greek authorities is the maximum consistent with a voluntary deal, a spokesman for the Institute of International Finance, which negotiates in the name of private creditors, said on Sunday.
The voluntary character of the debt restructuring is important for the euro zone to avoid triggering the pay-out of insurance against a Greek default.
Much of the attention will now turn to a meeting of euro zone finance ministers on Monday, and to whether EU states and the IMF consider that the plan that is being put together by Athens and private bondholders does enough to cut Greece's debt.
It is a question, now, really of the broader reaction of the EU official sector and of course the IMF on this proposal, IIF chief Charles Dallara told Antenna TV on Sunday.
The IMF insists any deal must ensure Greece's debt burden will be cut to 120 percent of GDP by 2020 from 160 percent now, as agreed at an EU summit in October. It has also warned that more efforts must be made by private bondholders or EU states to compensate for the fact that Athens' economic prospects have deteriorated since.
One banking source close to the talks said the IMF wanted the new bonds' coupon to be lower than the average 4 percent discussed by Athens and its banks.
The IMF has been pressing for a lower coupon rate on the new bonds, the source said.
Dallara and special adviser Jean Lemierre left Athens on Saturday without finalising the deal, with sources close to the talks saying many details had not been resolved yet, including legal aspects and how a sweetener promised to banks to facilitate the deal would be used.
We are at a crossroads and I remain quite hopeful, Dallara said.
But he also told Greek newspaper Proto Thema that failure to reach a deal could have dire consequences.
If there is not an agreement, then I think unfortunately it means a huge setback for Greece, for Europe and for the world economy, he said.
If there is no agreement, there will most likely be default. This could put Greece's membership of the euro zone at risk, he said, adding that this could also affect the euro and undermine confidence in other sovereign papers in Europe.
(Additional reporting by George Georgiopoulos; Writing by Ingrid Melander; Editing by Andrew Roche)