Below are the main points agreed to by Greece to re-secure the €130b bailout, first agreed upon in July 2011, courtesy of Bloomberg.
- Debt-swap to start in the next few days; involves swap for EFSF bonds; new bonds pay a coupon of 2.0% until 2014, 3.0% from 2015 to 2020, then 4.3%
- 53.5% haircut for investors vs 50%
- ECB’s profits from Greek bonds disbursed to national central banks, to be deployed to reduce Greek debt
- Successful PSI operation a necessary condition for a success of the program: now this is an issue, since the PSI will almost certainly fail and CACs will have to be enforced which bring up our question - is the usage of CACs in the "bailout" a Material Adverse Change clause, and is thus the loophole for collapsing the deal altogether?
- Remains to be seen if “slightly harsher” PSI terms are enough to trigger CDS, UBS says
- Greece’s government has reserved right to enact CACs
IIF:
- IIF says PSI would be the largest ever sovereign debt restructuring
- UBS FX strategist Geoffrey Yu notes that IIF appeared to stop short of giving the deal full endorsement, calling on members to consider it “carefully”
- Euro area, IMF to provide additional EU130b to 2014
- Interest rates on borrowing cut to 150bps vs 200-300bps
- Greek parliament to vote on a constitutional provision to ensure debt servicing payments prioritized
- Quarterly interest rate payments to be paid into a segregated account
- A permanent ‘troika’ task force will be in Greece to ensure adherence to the terms and conditions of the package
- Greek debt/GDP now targeted at 120.5% in 2020
- Analysis by IMF, European officials shows debt/GDP may only fall to 160% by 2020 vs 120.5% target
- Eurogroup to reconvene in early March on debt swap
NEXT STEPS:
- German parliament will seek to approve deal Feb. 27
- Finland expects to discuss bailout in week of March 12
- Dutch Finance Minister Jan Kees de Jager has mooted possibility of waiting until after Greek elections (expected April 8), according to Rabobank