ATHENS, Greece — Greece said Friday it might only go ahead with a bond swap plan that is a critical part of its second bailout if at least 90 percent of private creditors who hold government bonds participate.

The July 21 bailout plan would see banks and other financial institutions give Greece easier repayment terms on its bonds.

However, in return, Greece has to fund an expensive collateral arrangement, which will secure the remaining value of the bonds and would cost the country about €42 billion ($60 billion) until 2020.

The Athens Stock Exchange on Friday posted extracts of a letter sent by the government to foreign finance ministers saying that Greece "shall not be obliged to proceed" unless it could get at least 90 percent of its eligible bonds swapped or rolled over. It also said 90 percent of that must be bonds maturing between June 30, 2011, and Aug. 31, 2014.

"If these thresholds are not met, Greece shall not proceed with any portion of the transaction" if it determines — along with international partners such as the eurozone and International Monetary Fund — that the total contribution of the private sector is insufficient for the July 21 agreement to work, the letter said.

It said the participation of the private sector needed to have a positive impact on its debt sustainability, or its ability to repay its overall debt load of some €340 billion.

Greece had previously said it was seeking 90 percent participation, or €135 billion, but the figure had been set as a target rather than a condition.

The letter was sent to foreign finance ministers asking for help in determining which institutions in their countries hold Greek bonds maturing through the end of 2020. Finance Minister Evangelos Venizelos said the letter was received by 57 countries.

According to initial estimates, the bond swaps and rollovers were meant to save the Greek government some €37 billion by 2014, reaching a total of €54 billion by 2020. However, much of those savings would be eaten up by the cost of the collateral, so lower participation could quickly eliminate the benefits.

The Institute of International Finance, a financial sector lobbying group that has been leading the discussions on private sector involvement with the Greek government, has said that the estimates are based on a participation of 90 percent of Greek bondholders.

However, in recent weeks, speculation has mounted that Greece may fall short of that target.

Amadeu Altafaj-Tardio, a spokesman for the European Commission, the EU's executive, said discussions with Greece's private creditors were "ongoing."

"We have no reason to think that the figure will be far from that (90 percent) estimate," he said.

Debt-strapped Greece has been relying on rescue loans from eurozone countries and the International Monetary Fund since last year. It was granted a first, €110 billion ($159 billion) bailout in May 2010 but still needed to get a second rescue deal worth a further €109 billion ($157 billion) last month. The €109 billion figure is dependent on a strong participation of the private sector.

In return for the rescue loans, the country has pledged to tame its budget deficit, aiming for a target of 7.5 percent of gross domestic product this year from 10.5 percent in 2010. It has imposed a series of austerity measures, including higher taxes and cuts to public sector pay and other spending, and introduced more measures this year.

The country has struggled to meet its targets, and Venizelos said Greece was in a "very difficult" situation.

"There is no doubt that the Greek economy is going through its most difficult time in many decades, the most difficult time in the last 37-40 years," he said in parliament.

Venizelos said the recession was deeper than initially predicted and the economy would contract by more than 4.5 percent of gross domestic product — which would affect the country's targets.

But if the austerity measures were adhered to, "we will be very close to our fiscal targets and in 2012 we will be able to change the atmosphere," Venizelos said.

The talks with banks and other financial companies is just one of the aspects of the July 21 deal that is running into potential troubles.

Eurozone states, which will be funding the majority of the second €109 billion bailout, are also locked in talks about a Finnish demand to get collateral to secure its contribution to the bailout.

Senior officials from eurozone finance ministries were discussing the issue Friday in the hopes of finding a solution that would not endanger the overall bailout deal. Four other eurozone countries have demanded equal treatment if Finland is given collateral

Venizelos said he was confident the problem would be resolved.

"A solution will be found," he said. "We fulfilled our obligations. We are not the problem."

The minister said the calls for equal treatment by other countries "doesn't turn against Greece. It turns in favor of the unity of Europe."


Steinhauser reported from Brussels.