The Banking and Strategy Initiative

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European Sovereign Debt crisis: Greek agreement finally reached, announced

The Troika’s bailout for Greece was finalised with a 2 X Covered margin till 2020 and 3X covered margin thereafter to reduce the debt burden  As Jean Claude Juncker explains right now on the networks, the deal was finally inked with Greek projections at 121% of GDP , agreed with losses of 53.5% for the private sector

Though a Lehman like event was unlikely, the prospectof a technical Greek default was uppermost in minds of financial markets waiting on the deal for the last 20 odd hours and having almost given up at 3:00 am after which another hour has gone by. the austeriry measures include a $1.3 bln cut in Pharmacy drug procurement for OTC ailment prescriptions.

In order to reach the 120.5% level and to limit bailout to EUR 130 bln was the main objective according to Olli Rehn, the EU Commissioner. The ECB took no losses on the swap , its tranche transferred before new CACs were approved by Greek parliament and presented as a causa sine qua non for the other investors, where one investor has to agree at the expiry of the new bonds to rollover for the same to become effective and other easier exits for the government as learning from the current deal negotiations.

However, the ECB and this the Euro system of  Central Banks will contribute, such that Greek debt will reduce by 1.8% by 2020 amounting to Eur 1.8bln by 2020. The rest official contribution will derive from the lowering of the interest retroactively by 150 bp , reducing the 2020 debt burden by 2.8%  ECB will disburse profits from the Swap which will also be used to reduce Greek Liabilities as chosen by member states individually. The profits are likely to be EUR 12 bln for the Face value of 50 bln purchased at less than 38 bln price from markets. 

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One comment on “European Sovereign Debt crisis: Greek agreement finally reached, announced

  1. Pingback: European Debt Crisis : The Greek Debt Opportunity | Fund insight ( and a lot of volcker rule targets that made the opportunity happen) | The Banking and Strategy Initiative

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