Greece's private creditors said time for a debt-swap deal isrunning out after talks between financial and governmentrepresentatives in Athens failed to yield an agreement to cut thecountry's borrowing load.

“A range of issues were discussed and some key areas remainunresolved,” the Institute of International Finance, whichrepresents banks that hold Greek debt, said in an e-mailedstatement today. “Discussions will continue in Athens tomorrow, buttime for reaching an agreement is running short.”

Greece believes a final outline on a deal could be reached bythe end of next week, a senior finance ministry official saidtoday, with a formal public offer made at the beginning ofFebruary. He declined to be identified. The IIF has said its goalis for the swap to implemented by the end of January.

The IIF's Charles Dallara and Jean Lemierre, co-chairs of thesteering committee, met today in Athens with Prime Minister LucasPapademos and Finance Minister Evangelos Venizelos, aiming for adeal in which creditors would write down at least half of thecountry's debt in the euro area's first large restructuring. Morethan two months after the accord was announced, they still need toagree on the coupon and maturity of the new bonds to determine thetotal losses for investors.

The deal, hammered out by European Union leaders, Greekofficials and the nation's creditors at an Oct. 26-27 summit,called for bondholders to accept a 50 percent cut in the face valueof their Greek debt, with a goal of reducing Greece's borrowings to120 percent of gross domestic product by 2020.

The International Monetary Fund has sought a lower coupon thanthe range offered by investors to ensure Greece meets the deficittargets amid a worsening economy. Failure to complete the voluntaryswap threatens to further undermine confidence in the EU'sleadership during the crisis, as well as deter investors from Asiaand the U.S. from buying Europe's debt.

Greek Deputy Finance Minister Filippos Sachinidis said todaythat Greece could need additional international funding if thereisn't full participation of private creditors in a debt swap.Analysts have said some hedge funds holding Greek debt may resistthe debt swap, hoping for better returns from triggeringcredit-default swaps, which may harm banks.

“It's an issue between Greece and its creditors,” who will needto reach a deal, IMF spokesman Gerry Rice said at a briefing inWashington today. “Once they come to a formal agreement, the fundwill evaluate whether it's consistent with debt sustainabilitytargets.”

Merkel, Sarkozy

The IIF said “it is essential” to finalize the voluntaryagreement that support be given by all official parties in the daysahead. German Chancellor Angela Merkel, who met with FrenchPresident Nicolas Sarkozy earlier this week, said at the time thedebt restructuring needs to be completed soon to enable Greece toreceive its next tranche of aid.

“The second Greek program, including the debt restructuring, hasto be carried out quickly now because otherwise it won't bepossible to pay out the next tranche for Greece,” Merkel said onJan. 9. Greece “really has to implement the commitments made to thetroika” of the IMF, the European Commission and the EuropeanCentral Bank, she said.

ECB Vice-President Vitor Constancio separately today said thecentral bank's view on involving private bondholders in the Greekbailout hasn't changed, and that the central bank's own debtholdings won't be involved in such a swap.

“The stance is the same as what it was before,” he said at apress conference in Frankfurt today. “PSI is by definitionprivate-sector and we aren't involved in those negotiations.”

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