Saturday October 25, 2014 Search
Weather | Athens
19o C
12o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
EU approves 35.5 billion for Greece

Euro-area finance ministers freed 35.5 billion euros of aid for Greece and backed the country’s debt swap with private creditors, including the use of collective action clauses.

The decision, made by ministers on a conference call on Friday, allows the bond swap to close this month as planned with as much as 30 billion euros in public sweeteners, Luxembourg Prime Minister Jean-Claude Juncker, who heads the group of euro-region finance chiefs, said in an e-mailed statement. They also released 5.5 billion euros for Greek interest payments and said Greece was on track to win the rest of its bailout funds.

“The necessary conditions are in place to launch the relevant national procedures required for the final approval of the euro area’s contribution to the financing of a second Greek rescue package,” Juncker said. He welcomed a report from European and International Monetary Fund officials on Greece’s efforts and said the ministers expect a “significant contribution” from the IMF in the new package.

Euro leaders have hailed the debt exchange as a central element in their efforts to contain the sovereign debt crisis and get Greece’s economy back on track. IMF Managing Director Christine Lagarde said Thursday that the crisis, had it remained unchecked, could have done more damage to the global economy than the financial market collapse of 2008.

Harder default’

The debt swap and second rescue package may not cure Greece’s long-term debt woes, said Charles Wyplosz, director of the Geneva-based International Center for Money and Banking Studies. The debt swap aims to reduce Greece’s debt burden by more than 100 billion euros and lower debt to 120.5 percent of gross domestic product by 2020.

“We still don’t have a solution for Greece, so there will be a harder default to come,” Wyplosz said. “Greece can’t grow with this kind of debt so something more has to give.”

The euro-area ministers are scheduled to meet in Brussels on March 12 to discuss further elements of Europe’s crisis- fighting efforts, including whether and how to increase the firewall provided by the euro area’s rescue funds. German Finance Minister Wolfgang Schaeuble said that ministers will decide on the main Greek aid package at that meeting.

‘Only a foundation’

While the participation rate in the swap was “very heartening,” it remains decisive that Greece now carries out the necessary economic reforms, he said. “Naturally, this is only a foundation that’s been laid,” he told reporters in Berlin.
The International Swaps and Derivatives Association’s determinations committee meets in London on Friday to weigh whether the use of the collective action clauses is a credit event that will trigger the swaps. Schaeuble said that decision won’t affect Greece’s aid.

Juncker said on Friday that ministers had been told Greece would use collective action clauses on bonds governed by Greek law and that finance ministers were encouraged by “high private-sector participation” in the swap. The ministers said participation could rise further during a sign-up extension for bonds governed by foreign law.

The debt swap operation has been a “resounding success,” said Amadeu Altafaj, a spokesman for economic and monetary affairs commissioner Olli Rehn, to reporters in Brussels on Friday.

New bonds

The Greek government said Friday it will reach its target for the debt restructuring, with investors holding 95.7 percent of eligible bonds taking part. The government’s figure includes using the clauses to enforce participation, a move that may trigger insurance payouts under rules governing credit-default swap contracts.

In the exchange, investors will receive new bonds with a face value of 31.5 percent of the old ones together with notes from the European Financial Stability Facility. The new debt is governed by English law and comes with warrants that will provide extra income in years when Greek economic growth exceeds thresholds. The net present value loss for investors is more than 70 percent.

If the swaps do get triggered, it probably won’t roil financial markets, Italy’s deputy finance minister, Vittorio Grilli, told Bloomberg News on Friday.

“I think it’s in the market already,” Grilli said. “It is not that it will be taking anyone by surprise. So I think a lot of these events are already priced in.”

[Bloomberg]

ekathimerini.com , Friday March 9, 2012 (16:28)  
TAIPED waits for green light from Eurostat
Trade deficit shrinks on big drop in imports
SMEs unable to claim subsidies
Taxes kept growing in second quarter
Athens, Nicosia satisfied by EU leaders stance toward Ankara
A reference in Fridays European Council conclusions calling on Turkey to respect Cypruss sovereign rights left Athens and Nicosia content with the outcome of the European Union leaders su...
Suspended policeman chief suspect in cousins murder
A 27-year-old police officer who has been suspended from duty since 2013 for extortion, is being treated as the chief suspect in a murder committed in a suburb of Piraeus on Thursday. Police...
Inside News
BASKETBALL
A win is a win is a win for Olympiakos
A bad Olympiakos defeated a worse Laboral Kutxa 63-57 to make it two out of two in the Euroleague on Friday. In a game where the two teams had an overall field goal rate of about one in thre...
SOCCER
Panathinaikos snatches point at Eindhoven
Panathinaikos offered its fans a glimpse of its glorious past in European competitions snatching a draw at PSV Eindhoven, on an otherwise bad night for Greek soccer in the Europa League, as ...
Inside Sports
COMMENTARY
Tension for tensions sake?
It is evident that Turkish President Recep Tayyip Erdogan feeds off tension. He would barely have achieved as much as he has and prevailed if he had not been so keen to confront a series...
EDITORIAL
Testing ground
The Regional Authority of Attica is a good testing ground for politicians who appear to thrive on accusations to prove whether they can actually solve major problems of a practical nature. T...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
RECENT NEWS
1. A win is a win is a win for Olympiakos
2. TAIPED waits for green light from Eurostat
3. Trade deficit shrinks on big drop in imports
4. SMEs unable to claim subsidies
5. Taxes kept growing in second quarter
6. Thessaloniki Port expects 2014 to be record year
more news
Today
This Week
1. Woman killed in tram accident in Floisvo, south of Athens
2. Clocks to go back 1 hour on Sunday
3. Venizelos slams Turkey for 'flagrant violation of international law' off Cyprus
4. ECB vies for third time lucky in European stress tests
5. Cyprus GDP upgrade seen as boosting bailout exit plans
6. ECB bank assessment to show 6-billion-euro capital gap, Citi says
Today
This Week
1. The past, present and future of the Greek debt crisis
2. Greeces closed society is central to its current malaise
3. Greece must stick to reforms, says Schaeuble
4. At least 11 banks to fail European stress tests, three in Greece, report says
5. Cyprus to block Turkey's EU talks after EEZ violation
6. Samarass crumbling Greek exit lacks backing from economists
Find us ...
... on
Twitter
... on Facebook
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright 2014, H KAΘHMEPINH All Rights Reserved.