Greek default worries rise as bond swap talks are 'paused' The bond swap aims to reduce Greece's debt by €100bn and is a key part of a second, €130bn international bailout. Without it, the country could suffer a catastrophic bankruptcy that would send shockwaves through the global economy. The bailout tops a first, €110bn rescue agreed in May 2010, when the country borrowing costs soared to untenable heights. Prime Minister Lucas Papademos and Finance Minister Evangelos Venizelos met on Thursday and Friday with Charles Dallara and Jean Lemierre of the Institute of International Finance (IIF), a global banking body representing private bondholders to discuss the deal. Finance ministry officials from the eurozone also met in Brussels Thursday night on the issue. The IIF said in a statement: "Unfortunately, despite the efforts of Greece's leadership, the proposal put forward ... which involves an unprecedented 50pc nominal reduction of Greece's sovereign bonds in private investors' hands and up to €100 billion of debt forgiveness - has not produced a constructive consolidated response by all parties, consistent with a voluntary exchange of Greek sovereign debt. Under the circumstances, discussions with Greece and the official sector are paused for reflection on the benefits of a voluntary approach. The bondholders said that they hoped Greece, with the support of the rest of the eurozone, would be in a position to "re-engage constructively with the private sector with a view to finalizing a mutually acceptable agreement." Earlier, a senior Greek government official said the talks were likely to resume next week, possibly on Wednesday. Another person close to the talks said the negotiations were "very, very tense." Both spoke on condition of anonymity to discuss the highly sensitive negotiations.