(AP Photo)

Greek Finance Minister Evangelos Venizelos leaves Maximos Mansion after a meeting with Greek Prime minister Lucas Papademos, Charles Dallara and Jean Lemiere from the Institute of International Finance in Athens on Saturday Jan. 28 2012. Talks between Greece and private creditors on halving the country's privately held debt load have ended and a deal is very close, according to the creditors' representatives. (AP Photo)

ATHENS, Greece - Greece and its private creditors are very close to a deal that will significantly reduce the country's debt and give it more time to repay the rest of what it owes.

After three hours of talks with Prime Minister Lucas Papademos and Finance Minister Evangelos Venizelos on Saturday, creditor representatives Charles Dallara and Jean Lemierre issued a statement saying the two sides were "close to the finalization of a voluntary (private sector involvement) ... We expect to conclude next week as discussions on other issues move forward."

The statement also referred to "the framework expressed publicly earlier this week by Luxembourg Prime Minister Jean-Claude Juncker in his capacity as Chairman of the Eurogroup."

The reference suggested the creditors had agreed with Juncker's proposal that the new bonds to be issued by Greece in place of the old ones should have an interest rate "clearly below 4 per cent." The rate had been the main sticking point in the two-week-long talks as creditors had demanded a higher one.

Dallara, managing director of the Institute of International Finance (IIF) and Lemierre, senior adviser to the chairman, Banque BNP Paribas, represented banks, insurance companies and other private holders of some 206 billion ($270 billion) in Greek bonds.

While the details are not yet final, it is expected these bondholders will accept a 50 per cent writedown in the value of their bondholdings, meaning Greece's debt will be reduced by just over 100 billion. The maturities in the new bonds will also be longer.

An agreement with private creditors is also seen as a prerequisite for Greece to get a second, 130 billion bailout from its EU partners and the International Monetary Fund, although there are other issues involved before Greece can get that aid.

The EU and the IMF have already signed off on a 110 billion aid package, in May 2010, most of which has already been disbursed.

Dallara and Lemierre will leave Greece on Sunday and "will remain in close consultation with Greek and other authorities," the creditors' statement said.

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Elena Becatoros in Athens and Gabriele Steinhauser in Brussels contributed.