Bloomberg: Greece’s creditors said to prepare proposal for bailout deal

Greece’s creditors may present the government of Alexis Tsipras with a framework of measures required for completing the nation’s stalled bailout review, two people familiar with the matter said, as prolonged deadlock raises doubts about the country’s ability to repay debt due in July.

The proposal is going to be presented to the Greek government as soon as Friday, the people said, as progress is sought before a scheduled meeting of euro area finance ministers on Feb. 20. It will include fiscal measures equal to about 2 percent of Greek gross domestic product, which would be triggered if Greece fails to meet the budget targets agreed under its latest bailout, one of the people said. The people asked not to be named as the talks between the two sides aren’t public.

Mission chiefs representing the European Commission, the European Central Bank, the European Stability Mechanism and the International Monetary Fund will consider returning to Athens to continue talks with the Greek side, depending on the government’s response to the proposal.

Greek bonds fell on Thursday, with yields on two year notes rising 66 basis points to 10.03 percent, the highest since June. A quarrel between the IMF, the government in Athens and European creditors about the terms attached to Greece’s latest bailout has renewed concern about the country’s place in the currency bloc.

While an eventual agreement is the most likely scenario, the Greek “government is divided,” Teneo Intelligence analysts Wolfango Piccoli and Carsten Nickel wrote in a note to clients on Thursday. “While the Finance Ministry seems to support a quick deal, others are resisting and arguing that Greece could get a better deal if the looming elections yield a major negative surprise that could spook the European leaders and force them to soften their position.”

Source: Bloomberg