Greek finance minister Evangelos Venizelos was hopeful on Tuesday of at last reaching the deal with private sector bondholders that is key to a new bailout package for the country.

"We are close to an agreement, I believe that," Venizelos said at a conference in Athens.

"I believe that because I have a personal insight into the negotiations and I know this is feasible, provided our institutional partners respect the Oct 26 decision," he said, referring to an agreement by eurozone leaders over a second bailout for Greece.

Separately, a government official said on Tuesday that the negotiations were going well and that the initial terms of the so-called Private Sector Involvement (PSI) were likely to be finalized by early January.

Bankers have in general been less optimistic about prospects for a swift agreement in which they would have to accept a 50 percent nominal reduction in the value of their Greek bondholdings in exchange for a mixture or cash and new bonds.

"I can't see any deal this year," said one senior banker with knowledge of the discussions.

The arrangement is intended to enable Greece to cut its debt from 160 percent of gross domestic product to 120 percent by 2020 and is a central part of the bailout which includes 100 billion euros from international partners.

Significant differences still exist over key parts of the package which could significantly affect the final cost borne by the banks including the interest coupon and maturity on the new bonds.

A Greek banking source said that there had been progress on other issues, including whether guarantees for private sector creditors would be treated equally with creditors from the public sector.

The source also said it had been agreed that the new bond would be regulated not under Greek law but under English law, which provides for so-called collective action clauses allowing the payment terms of the bond to be changed after issuance.

A deal on the PSI element of the new bailout is vital if the new rescue package is to take effect.

Greece faces a 14.5 billion euro bond redemption on March 20 and without new financing it could be forced into a default which could trigger a wider emergency in the eurozone as it struggles to contain the escalating debt crisis.