Greece bailout agreed

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After Euro zone finance ministers exchanged their views on how to resolve the lockout between Greece and the size of haircuts to be taken by its private creditors, at almost 3 am in Brussels they appear to have reached a deal that will see Greece being financed by 130 billion euros as they plan to reduce its debt to GDP ratio to 121%

Officials noted extra compromises out of private creditors were extremely tough. Greece's private bondholders did presumably agree to 50% haircuts of their holdings face value along with lower yields and an extension on the length of their repayment schedules, although they eventually threw the towel amid pressure to ease the debt burden to Greece.

The ECB was also reported as willing to give up profits to help ease Greek debt load. From FT: “The European Central Bank will pass up profits it has made from buying Greek bonds over the past two years under its Securities Market Programme in an effort to lighten Athens’ debt burden, a senior euro zone official told Reuters on Tuesday.”

There will still be lingering uncertainty coming from different angles , with the vast majority of media newswires sounding worryingly pessimistic about the prospects of the Greek economy even with a new bailout approved.

The Euro strengthen slightly on the news release: GBP/EUR 1.1940 but really most of the move had already been priced in when GBP/EUR dropped from 1.2050 last week back down to these levels.

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Posted in Daily Market News on May 30 2014

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