Terms of EU Support for Greece
April 12, 2010
The euro has strengthened significantly over the past 24 hours as EU officials finalize a prescription for Greece. Here are the details:
1) bilateral loans from European governments for 3 years
2) up to €30bn lending by euro area members states for the first year, in addition to the IMF’s contribution (€12.5 to 15bn reportedly)
3) lending rates near 5% calculated as 3-month euribor plus 300bp spread with further 100bp for more than 3 years and plus 50bp for operational cost
4) IMF loans priced according to their formula (currently 3.25% for a loan of 10x quota)
The package is larger than the market had anticipated and the rate is much lower than market rates.
More on this topic
(What's this?)
Eurozone Debt Crisis: What to Expect if Greece Dumps the Euro
(Money Morning, 5/23/12)
Greece has 46 Hours to Exit Euro
(Expected Returns, 5/23/12)
European Fiscal Compact In Crisis As Irish Vote Looms
(Value Investing, 5/7/12)
Posted in eur/usd
content rss
April 12th, 2010 at 11:43 am
That should be enough for Greece to get some air to breeze for a couple of months - and the germans are already making sure that they make enough press releases about how much they dislike the EU “Support” for Greece so the €/$ doesn’t change too much (which is a nice way of hedging the change, I must say):
http://www.bloomberg.com/apps/news?pid=20601100&sid=aplnxyIj1wBI
On a side note - is it just me the one who is missing an article about the Hu-Obama meeting this Wednesday, or Geithner’s visit to Beijing last week? It is going to be quite relevant on the USD/CNY… My apologies for commenting it here, but since you don’t post on the CNY very often -which is surprising- I couldn’t find a better place…
April 12th, 2010 at 11:01 pm
Kathy, The problem and question i have - is does this actually fix the root cause of the problem, or is it simply a band-aid fix in your opinion ?
April 13th, 2010 at 7:03 am
@Mark:
From:
http://www.bloomberg.com/apps/news?pid=20601085&sid=aX4h12n6VrKU
“needs to raise 11.6 billion euros by the end of May to cover maturing debt, with another 20 billion euros required by year-end to pay interest and finance this year’s deficit. Last week the government estimated its 2009 shortfall to be 12.9 percent of gross domestic product, the biggest in the euro’s history and more than four times the EU’s 3 percent limit. The previous forecast was 12.7 percent.”
What do you think? My humble opinion is that they will never be able to pay all that debt back. And they are not the only ones, of course…
April 13th, 2010 at 9:49 am
On your post http://www.kathylien.com/site/non-farm-payrolls/dollars-reaction-to-payrolls-should-last
I hinted
>>You sure about this Kathy as I see minor accumulation going on…
hopefully next time someone will pay attention as this is the second time (first one aud/nzd). Unlike other people I don’t come here to make money
Anyways I will try to stay out of this or keep my posts to a minimum. As they say “you never know who on the other end of the wire is”