Bondholders negotiating a debt swap with Greece may get asweetener tied to a revival in economic growth that would ease theimpact of accepting a lower interest rate on the new bonds, peoplewith knowledge of the talks said.

In discussions late last week in Athens, creditors lowered theirdemands for an average coupon on the new 30-year securities theywould receive to as little as 3.6 percent from 4.25 percent afterEuropean officials demanded they take steeper losses, peoplefamiliar with the matter said at the time.

While the lower coupon would lead to an estimated loss of 70percent or more for investors, adding a so-called gross domesticproduct warrant — which would pay bondholders more if the Greekeconomy rebounds — would trim the loss in net present value termsby an estimated 0.5 to 3 percentage points, said two people, whodeclined to be identified because the talks are confidential.

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