A Greek bond writedown of 50 percent on half of the Greek debt is pretty much assured, sources close to the situation told CNBC on Wednesday.
However, Slovakia's Prime Minister Iveta Radicova said Wednesday afternoon that private investors should accept a haircut of more than 50 percent on their holdings of Greek debt.
"Slovakia is saying that the haircut has to be more than 50 percent," she told reporters before leaving for an EU summit in Brussels, Reuters reported.
Negotiators remain divided on the issue of what will happen to the remaining 50 percent of the current outstanding 205 billion euros ($284.9 billion) of debt load.
Indications are that the remainder will be divided into a cash sweetener, Greek Sovereign paper and paper from the European Financial Stability Facility (EFSF), the name of the currency zone's bailout fund. The exact mix remains to be determined and remains a key point of debate.
Indications are that the deal on a writedown—or "haircut" in current parlance—bears no resemblance to the original 21 percent PSI haircut, but will remain voluntary, though this word's meaning is becoming increasingly fuzzy, sources said.
Improved Chance of a Deal?
Prospects for a comprehensive deal to resolve the euro zone debt crisis at a summit on Wednesday had begun to look dim, with deep disagreement remaining on critical aspects of the potential agreement, including how to give the region's bailout fund greater firepower.
While there appears to be broad consensus on the need for around 110 billion euros ($150 billion) to be injected into the European banking system to help it withstand a potential Greek debt default and wider financial contagion, there is little clarity on either of the other two critical parts of the plan.
Aside from the Greek writedown, any agreement would hopefully involve scaling up the region's 440 billion euro EFSF.
European Union leaders will consider two methods for scaling up the EFSF, one by using it to offer guarantees to purchasers of new euro zone debt, and the other using part of its capacity to set up a special purpose investment vehicle that would attract money from sovereign wealth funds and other investors to buy debt.
They might also agree to combine both options.
No Concrete Numbers Expected
Whereas financial markets have been hoping for weeks that Wednesday's summit, scheduled to start at 1500 GMT with a gathering of all 27 EU leaders, followed at 1730 GMT by the meeting of the euro zone heads of state, will produce detailed figures on how to combat the debt crisis, there is now little likelihood of concrete numbers, sources say.
"The numbers are not yet finalized — you have to have all parameters in place and see what is needed and what the leverage factor would be.
It needs a lot of technical work to come up with a number," one EU official said, adding that discussions would continue on Wednesday to forge a pre-summit consensus.
"The leaders will agree on the options tomorrow, but whether it will be an agreement with all details remains to be seen.
I think it will be challenging — it will be very difficult to agree on everything." Instead, it looks likely that it won't be until Nov 7-8, when EU and euro zone finance ministers are next scheduled to meet, that the details of whatever euro zone leaders agree on during Wednesday's summit will be completely finalized.
- Reuters contributed to this report.