Cash buffer may be built on repos too
The European Commission’s compliance report for Greece, revised for last Monday’s Eurogroup meeting, provides for the strengthening of the so-called cash buffer from repos too.
This source of cash would ease the pressure for takings from two planned bond issues by the end of the bailout program so as to quickly gather the necessary funds.
The revised report adds to the 10.2 billion euros from the European Stability Mechanism not only the 3 billion from the seven-year bond, but also 3.2 billion from repos, taking the sum to 16.4 billion euros. “State deposits at end-January were above the forecasts of the first version of the compliance report, as the Greek authorities used available resources to increase the repos,” the report notes.
In that sense, the new provision may assist the argument for a “clean exit” from the program, although bond market sources note that the additional liquidity does not rule out a precautionary line of credit, as the extra funds could be used to buy back some expensive debt.