Troika

I suppose we have to talk about Greece. Things occurred yesterday! The main things are here and here, basically the Troika is pleased that Greece has done everything right, to some approximation, and therefore they are disbursing some new loans and revising the terms of their old loans to make things even better, and all will be well by the time the aid program concludes in, I believe I have this right, 2057.1

The particular things that are or might be happening are, officially:

  • Greece is getting €43.7bn in new loans from the European Financial Stability Fund,
  • Its old, direct loans from other EU countries will have a 100bps lower interest rate than they used to, and its old and new EFSF loans will have a 10bps lower “guarantee fee cost.”
  • The old and new bilateral and EFSF loans will have be extended by 15 years, and the EFSF loans’ interest will be deferred for 10 years.
  • The other EU countries will give Greece the profits from Greek bonds they bought at a discount in previous support programs.
  • Greece will try to buy back some public bonds in the open market at prices “no higher than those at the close on Friday, 23 November 2012,” which means about 35 cents on the dollar (16.3% yield) for the ten-year.

This structure – except for the last part, which is just fun2 – is designed to accomplish the two perennial goals of: Read more »