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“The deal reached overnight confirms a piecemeal approach to Greek debt relief. While concerns about the long-term sustainability of the country’s debt look set to eventually resurface, the additional relief measures put in place and post-programme governance should be enough to keep Greek risk under control for some time,” ING analysts note.

Key quotes

“By confirming that Greece has implemented all of the 88 prior actions under the fourth and final review, eurogroup chief Mario Centeno announced that Greece has successfully completed its ESM (Emergency Stability Mechanism) programme and that there will be no follow-up programme.”

“The first batch of debt relief, a 10-year extension of the EFSF (European Financial Stability Facility) interest and amortisation, will be delivered upfront. This should help Greece to smoothly return to market financing all along the Greek curve. A second batch of debt relief measures will be agreed upon, with conditions attached. These include the abolition of the step-up interest rate margin related to the debt buy-back tranche of the second Greek programme and SMP profits (Securities Markets Programme) from the ESM segregated account as well as the transfer of ANFA (Agreement on Net Financial Assets) and SMP income.”

“As expected, the IMF decided not to enter a stand-by arrangement but will remain involved in the post-programme surveillance framework with the eurozone institutions. The divergence on debt sustainability between the IMF and other lenders was apparently not bridged by the debt relief package approved yesterday. IMF managing director Christine Lagarde said the measures should ensure medium-term sustainability but reaffirmed that the IMF has reservations over the long term.”