Germany is studying a proposal to write down 75 percent of Greek government bonds held by private creditors as part of a planned debt swap to ensure greater debt sustainability, Greek news websiteEuro2day.gr reported today, without citing anyone.

Under the terms of Greece’s 130 billion-euro ($168 billion) second bailout backed by European leaders in October, investors would take a 50 percent hit on the nominal value of 206 billion euros of privately owned debt.

Talks are ongoing about the specifics of the role of the private sector and Germany assumes that the negotiations will end soon, the Finance Ministry in Berlin said in an e-mailed response to the Greek report, without elaborating. The ministry didn’t respond to a question on the 75 percent writedown as reported.

Greece’s creditors are resisting pressure from the International Monetary Fund to accept bigger losses on holdings of the nation’s government bonds, three people with direct knowledge of the discussions said last month. Greece’s debt will balloon to almost twice the size of its economy this year without a write-off accord with investors, the IMF said Dec. 13.

At a Dec. 9 European summit, German Chancellor Angela Merkel backed away from a prior demand that bondholders shoulder losses in any future euro-area rescue, saying that Greecewas a “special case.”

To contact the reporter on this story: Rainer Buergin in Berlin at rbuergin1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

http://www.bloomberg.com/news/2012-01-02/germany-says-greek-debt-talks-near-end.html

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