Greece gets closer to brink of bankruptcy - Telegraph Fears are mounting that Greece could be the first European country to default on its debt in 60 years, as the country gears up to salvage collapsed talks over bond repayments on Wednesday. Three months of negotiations ground to a halt on Friday night, amid a wave of downgrades by ratings agency Standard & Poors aimed at a clutch of European countries, including France. The unexpected breakdown in talks between Greece and its private-sector creditors has taken the country a step closer to bankruptcy after a failure to sign up lenders to a voluntary and orderly 50pc haircut to their holdings. Greeces finance minister Evangelos Venizelos said talks would resume on Wednesday to bridge differences but insiders remained sceptical that a deal could be stitched at such a late stage. The clock is ticking for Greece, as a deal must be reached before March 20, when the country is due to receive a further 130bn (£107bn) bail-out tranche from the International Monetary Fund and must make a key 14.5bn bond payment. The problem centres on the difference between lenders agreeing to a voluntary and orderly default which would mean swapping into bonds with a lower value and lenders refusing terms, which would cause a default. This type of credit event would trigger billions of insurance claims through credit default swaps (CDS), insurance policies taken out to protect investors in the event of a default. The problem is that, of the 315bn of Greek debt outstanding, only 7.8bn is covered by Greek CDS. The vast majority of Greek debt is held by European banks, which have little insurance on their exposure. Most Greek CDS are held by hedge fund managers accused by Germany and France of financially benefiting from sovereign woes.