Tuesday, May 31, 2011

Greece will probably get EU Aid to avoid default

Building on the two previous posts, an interesting development.

Greece will probably get Aid. Maybe?

Greece will probably get the bailout loans needed to avoid becoming the first euro country to default, Fitch Ratings said.

While filling a financing hole of about 30 billion euros ($43 billion) next year, the European Union also probably won’t force Greece to extend maturities, a step opposed by the European Central Bank, according to today’s Fitch note.

Greece will probably remain shut out of financial markets beyond the scheduled end of the 110 billion-euro bailout in May 2013, Fitch said in a report on its May 20 decision to cut Greece’s credit rating to three levels to B+.

EU and ECB officials remain divided over how to aid Greece, with some European leaders calling for new loans and a debt “re-profiling” -- convincing bondholders to voluntarily accept an extension of maturities.

ECB (central bank) officials have said “re- profiling” is tantamount to default and would prompt the Frankfurt-based central bank to refuse to accept Greek bonds as collateral in their emergency funding operations, wiping out the capital of the Greek banking system, the biggest holder of the country’s bonds.
And the EU and European Central Bank are still at odds.


  1. some concerns;

    This is from Moody's and Fitch.
    There are alot of probably's in the article.

    Which makes me go hm?

    Today Germany is saying they have "clear expectations" of investor help for Greece.
    I believe the big French banks hold the vast majority Greek debt, will they go along with this?
    They have broke ranks one already...

    Is Germany trying to save the EU?

  2. http://www.bloomberg.com/news/2011-06-01/germany-has-clear-expectation-of-investor-help-for-greece-1-.html

    Germany has the “clear expectation” that private creditors will join in any further financial support granted to Greece, Finance Minister Wolfgang Schaeuble’s chief spokesman said.

    Euro-area governments will discuss a report on Greece’s progress in adhering to the terms of its international bailout at a meeting in Vienna today, said ministry spokesman, Martin Kotthaus. They may also talk about creditor involvement in Greece in the event that any additional help is needed, he said.

    “If the public sector, including taxpayers, were to agree to give the Greeks more breathing room, then I think it’s obvious to have private creditors join such a project,” Kotthaus said. “I can’t tell you how that looks in detail because we’re waiting for the questions and answers” from the Greece inspectors’ report.

    The so-called troika of the European Union, the European Central Bank and International Monetary Fund is preparing to report on Greece’s progress, a precondition for EU leaders to decide what further steps if any to take to help Greece.

    Kotthaus, asked about a report in today’s Frankfurter Allgemeine Zeitung that the IMF may not pay out its fifth tranche of aid to Greece, said the international rescue is a “a common program.”

  3. This situation looks different for the German government and the federal states.