Greek bonds rise after "historic" deal with creditors, but not by much
By Alexander Bueso
Date: Friday 22 Jun 2018
(Sharecast News) - Athens has managed to clinch a deal with its creditors to ease the burden from the country massive debt pile, in what some observers are hailing as a "landmark" deal which it is hoped will pave the way for the country's long-term economic success.
Yet even with the country set to exit its rescue programme on 20 August, not all of Athens's creditors were wholly convinced that its debt burden was now 'sustainable'.
European Central Bank chief Mario Draghi said: "We believe that the adoption of the set of debt measures agreed by the Eurogroup will improve debt sustainability in the medium term."
The head of the International Monetary Fund, Christine Lagarde, was more explicit, saying the IMF still had "reservations".
No progress was made on the return of the Elgin Marbles.
But following a marathon round of talks overnight, the Mediterranean country's creditors, the International Monetary Fund, European Central Bank and European Union, agreed to extend the maturities on the €96.6bn of debt owed to them under the terms of the country's second bailout by 10 years.
They also granted Athens a 10-year grace period on the interest and amortisation payments due on those loans.
"We believe that the debt is now viable, we can have access to the markets now and in a context of surveillance and by continuing our reforms we can pursue this," said Greek finance minister Euclid Tsakalotos.
Greece's creditors also acquiesced to increase the size of the final tranche of aid to be disbursed to the country from the €11.7bn initially foreseen to €15bn.
Those monies would be used, among other purposes, to help Athens build a €24.1bn cash buffer to help it access global capital markets.
The creditors did also agree on returning to the Athenian Treasury part of the €4.0bn of profits the ECB had made on its holdings of Greek debt.
An annual penalty of €220m on some of Greece's loans was eliminated as well.
However, the agreed measures would be subject to the country's performance following the end of its bailout and be disbursed progressively over the next four years.
"Yesterday night, the Eurogroup came to an agreement on additional upfront debt relief for Greece, which significantly reduces the country's financing needs over the next decade and thus increases its chances of being able to return to the market on a regular basis in the coming years. The terms of the agreement are towards the upper limit of what the Greek side had been hoping for," said analysts at UniCredit Bank AG in response.
The Eurozone also committed itself to considering additional measures in the future, such as further re-profiling the sovereign debt or extending longer grace periods to the country on its loans - should economic conditions worsen unexpectedly.
That aspect of the deal - in particular - was especially welcomed by Draghi.
In exchange for all of the above, Greece said it would maintain a primary budget surplus worth 3.5% of its gross domestic product until 2022 and of 2.2% of GDP between 2023 and 2060.
In reaction to the news, as of 1158 BST the yield on the benchmark 10-year Greek government note was down by 16 basis points to 4.15%.
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