Athens: Greece warned on Friday it may opt out of a debt swap crucial to its second international bailout if too few investors rally behind it, raising the ante on the stricken country’s €150 billion ($215 billion) lifeline.

The swap to shave €37 billion off its existing debt is now conditional on 90% of private sector investors agreeing to the deal, the country said in its formal letter of inquiry to other governments.

It had previously set that threshold as a target, not a condition. The condition applies to the holders of Greek bonds maturing by both 2014 and by 2020.

“If these thresholds (or either of them) are not met, Greece shall not proceed with any portion of the transaction," the letter said.

But Athens left itself some room for manoeuvre, saying that it would only pull out of the deal if the take-up failed to satisfy its international partners, such as the European Union and the International Monetary Fund.

This would be the case “if it determines, in consultation with the official sector, that the total contribution of private sector creditors ... is insufficient to permit the official sector to support the new multi-year adjustment programme."

The statement follows signs that there had been a delay in making the formal offer to banks, sparking worries Athens was struggling to get enough investors to agree.

The Institute of International Finance, a bank lobby group that is coordinating the talks said on Thursday that between 60%-70% of bondholders had signalled they would participate in the plan.

More were likely to join, it said, once a concrete offer was made. But others said that setting the 90% threshold as a condition seemed ambitious.

“By pinning it down so high, without any leeway in terms of a target range... it seems to me that they really like to put some pressure on the system here," said David Schnautz, strategist at Commerzbank in London.

Collateral Row

A Paris-based banker said one drag on the deal may be a row among euro zone governments about Greece’s promise to provide collateral to Finland in return for its portion of the official bailout.

“I get the feeling there’s been quite a bit of delay in finalising the methodology and the implementation of this plan," the source said. “There’s also a big worry about the contributors to the final package, given what is happening in Finland, Austria and in other countries, and its ratification."

Greece is aiming to get investors holding about €135 billion to participate, out of the roughly €150 billion of bonds maturing by 2020.

The letter was meant as an invitation to banks to declare their non-binding interest to take part in the bond swap by 9 September, two senior Greek bankers said, speaking on condition of anonymity. “After 9 September, there will be a formal invitation to declare binding interest to participate, by early October," one banker said.

Friday’s letter provided further details of the four options available to investors, including three offers for a debt exchange offers and one for a rollover into debt of up to 30-year maturity, as well as a bond buyback scheme.

The plan to involve the private sector — who will take a 21% loss on their holdings — in Greece’s second bailout were designed by politicians aiming to shift some of the burden of the costly rescue away from taxpayers.

Greece has slightly changed the accounting treatment of the bond value losses to be incurred by bondholders, to make them more favourable for banks, one Greek banker said.

Interest rates for Greek debt rose further on Friday with 2-year yields continuing to set new record highs above 46.5%. The 10-year yield spread — a measure of the risk premium over German debt — was 1,635 basis points, within sight of record highs set on Thursday.