EU CRISIS ROAD MAP: Key Milestones Ahead

LONDON (Dow Jones)–The European Financial Stability Facility holds its first six-month treasury bill auction Tuesday, testing the market a day after being downgraded by Standard and Poor’s. EFSF’s downgrade followed the downgrade of credit ratings of nine European countries backing it, including France. The loss of its prized triple-A credit rating could limit the fund’s borrowing capacity at a time when large euro-zone economies, such as Italy, are seen as needing external assistance with their funding requirements.

Meanwhile, deadlocked Greek debt-rescheduling negotiations threaten to delay key talks for a critical bailout package set for early next week, with officials warning of a rising risk of default unless a breakthrough comes soon.

A senior delegation from the International Monetary Fund, the European Union and the European Central Bank is to arrive in Athens Friday to discuss Greece’s second rescue program. Equally important is a meeting of European finance ministers in Brussels next Monday to formulate their portion of the next Greek bailout, set in October at EUR130 billion.

But before then, the Greek government needs to wrap up talks seeking a 50% write-down on its debt owed to creditor banks , which have been stalled due to differences with private sector creditors over the coupon on new Greek bonds.

This is the known worry list:

–Tuesday: Spanish, Greek T-bill auctions. German January ZEW economic sentiment indicator. Three months since Moody’s began review of France’s “stable” rating outlook. EFSF 6-month T-bill auction.

–Wednesday: ECB seven-day dollar operation. Portuguese T-bill auction. German bond auction. Greece likely to resume talks with private sector creditors on debt writedown.

–Thursday: Spanish, French bond auctions.

–Friday: Troika of international inspectors expected to return to Greece to resume talks on new bailout deal. Ireland’s troika of lenders releases its latest quarterly review of the country’s bailout. Sarkozy, Merkel meet Mario Monti in Italy (meeting may be postponed, officials now say.)

–Sunday, Jan. 22: Finnish presidential election, first round.

–Monday, Jan. 23: Euro-zone finance ministers meet. French January business sentiment index.

–Tuesday, Jan. 24: European Union finance ministers meet. Spanish T-bill auction. Flash euro-zone January PMI data.

–Wednesday, Jan. 25: Preliminary data on the Spanish government’s annual budget deficit expected around this time. German January Ifo business climate index. ECB seven-day dollar operation. ECB three-month long-term refinancing operation. German bond auction. World Economic Forum begins in Davos, Switzerland (through Jan. 29).

–Thursday, Jan. 26: Italian bond auction. EUR45 billion of 3-month ECB LTRO funds mature.

–Friday, Jan. 27: Italian T-bill auction.

–Monday, Jan. 30: EU leaders’ summit. Italian, Belgian bond auctions.

–Tuesday, Jan. 31: Greece aims to conclude talks detailing new EUR130 billion loan deal, debt-exchange program with private-sector creditors by this date.

–Wednesday, Feb. 1: EUR25.8 billion of Italian BTP bonds due. Portuguese T-bill auction. German bond auction. Euro-zone January manufacturing PMI data.

–Thursday, Feb. 2: French bond auction. –Friday, Feb. 3: Euro-zone January services PMI data.

–Monday, Feb. 6: Italian parliament must have approved government’s fiscal, growth package by this date.

–Wednesday, Feb. 8: German bond auction.

–Thursday, Feb. 9: ECB interest-rate statement, press conference.

–Friday, Feb. 10: EUR1.0 billion in Greek debt maturing.

–Monday, Feb. 13: Italian T-bill auction.

–Tuesday, Feb. 14: Italian BTP auction. Greek T-bill auction. German February ZEW economic sentiment indicator.

–Wednesday, Feb. 15: Portuguese T-bill auction. Flash data on 4Q EU gross domestic product.

–Thursday, Feb. 16: French bond auction.

–Friday, Feb. 17: EUR1.6 billion Greek T-bills maturing.

–Monday, Feb. 20: Euro-zone finance ministers meet. Flash euro-zone February PMI data.

–Tuesday, Feb. 21: European Union finance ministers meet. Greek T-bill auction.

–Wednesday, Feb. 22: German bond auction.

–Thursday, Feb. 23: German February Ifo business climate index.

–Friday, Feb. 24: Italian bond auction.

–Saturday, Feb. 25: Group of 20 finance ministers, central-bank governors meet.

–Monday, Feb. 27: Belgian bond auction, Italian T-bill auction.

–Tuesday, Feb. 28: ECB three-month, three-year long-term refinancing operation. Italian bond auction.

–Wednesday, Feb. 29: EUR10.6 billion of Italian CTZ bonds mature. German bond auction.

–Thursday, March 1: EUR14.9 billion of Italian BTP and EUR12.3 billion CCT bonds mature.

–Thursday, March 1-Friday, March 2: EU leaders summit.

-By Jenny Paris and William Kemble-Diaz, Dow Jones Newswires; 44-20-78429347;

–Emese Bartha, David Roman, Neelabh Chaturvedi, Alkman Granitsas, Patricia Kowsmann and Eamon Quinn contributed to this article.


Greek PM confident debt talks will be clinched in time

By George Georgiopoulos
ATHENS, Jan 16 (Reuters) – Greek Prime Minister Lucas Papademos promised a debt swap would be clinched in time and dispatched senior officials toWashington on Monday to break a deadlock in talks that has prompted new fears of a disorderly default.

Athens needs a deal with the private sector, the EU and the IMF to avoid going bankrupt when 14.5 billion euros of bond redemptions fall duein late March, but talks with its creditor banks broke down without an agreement on Friday. (news)
A leading representative for the creditors said Athens was not the problem in the talks, suggesting the issue lay with terms insisted onby foreign lenders keeping Greece afloat with aid.

The head of Greece’s debt agency and a senior adviser were travelling on Monday to Washington to meet International Monetary Fund officials, a government source said, and Athens put a braveface on the standoff.

“There is a little pause in these discussions. But I am confident that they will continue and we will reach an agreement that is mutually acceptable in time,” Papademos said according to a transcript of an interview withCNBC.

Under the bailout terms agreed in October, Greek privately held debt would be reduced by half so that, together with structural reforms, the overall debt to GDP ratio of Greece would fall to 120 percent in 2020 from 160 percent now. Inspectors from the EU, the IMF and the ECB, due in Athens on Tuesday for talks on a second, 130-billion-euro bailout, have warned they need the deal with the private sector to achieve that debt-reduction goal before they agree to give more aid.

Papademos said talks on these two processes must be completed over the next two to three weeks.

“This is the objective. I think the conditions are in place in order to do so,” Papademos told the broadcaster.

UNCERTAINTY GROWS Charles Dallara, head of the Institute of International Finance who represents Greece’s private creditors, told the Financial Times an agreement in principle was needed by the end of this week if it was to be finalised in time for the March bondredemptions and said the Greeks were not the problem.

“All the European heads of state said they wanted a deal with a 50 per cent (haircut) and a voluntary agreement,” Dallara was quoted as saying. “Some of their own collaborators are not following that decision.”

Negotiations stalled over the interest rate Greece will pay on new bonds it offers.

Greece, in its fifth year of recession, has continuously missed its fiscal targets, prompting speculation that the country mayneed further financial support to put its debt on viable footing.

The country has repeatedly flirted with bankruptcy in recent months, with only bailout loans from European partners and the IMF agreed on condition of unpopular austerity measureskeeping Greece away from a default.

Papademos played down speculation that Athens would need additional aid to that agreed at a euro zone summit in October.

“I think the funds that have been pledged at the Euro Summit, combined with theoutcome of the private sector involvement process should be sufficient in order to support financially the Greek economy,” Papademos said.

Uncertainty over fixing Greece’s debt crisis is more of a threat to Europe’s stability than the downgradeon Friday of nine euro zone countries’ credit ratings by Standard & Poor’s, British finance minister George Osborne said on Monday. (news)
The downgrades were largely expected and traders said pressure on Italian and Spanish bondyields on Monday were offset by the European Central bank stepping in to buy the bonds. (news)
Bill Gross, the manager of the world’s largest bond fund PIMCO, said in a Twitter post that Standard & Poor’s downgrade had made investors”aware” that countries can default and Greece would be the next example.

(Additional reporting by Angeliki Koutantou and Karolina Tagaris; Writing by Deepa Babington; Editing by Ingrid Melander/Mike Peacock) Messaging: