"The total official financing will amount to an estimated 109 billion euro. This programme will be designed, notably through lower interest rates and extended maturities, to decisively improve the debt sustainability and refinancing profile of Greece."
Markets and especially the financial sector like banks (especially French banks) owning debt from Greece (or CDO) have positively reacted to the announce for a different reason that the one shown in the press IMHO. The major risk for the banks is the inability from a customer to pay their debt. With the current proposal the risk is again moved to the public sector where they will take the part of the debt that Greece cannot pay or pay with difficulties.
So for the banks, it's a great move as their current contribution is just a small part from their revenue removed of the interest rate on the debt while lowering down the risks of unpaid debt.
Without forgetting that the ECB is feeding the banks with a preferential rate (around 1%) for credit given to other countries by the banks with a higher rate (around 3-4%).
So the winner is clearly the financial sector. We removed the risks for you and States will cover by public financing. It's just like the "refinancing" for CDO in 2008...
Markets and especially the financial sector like banks (especially French banks) owning debt from Greece (or CDO) have positively reacted to the announce for a different reason that the one shown in the press IMHO. The major risk for the banks is the inability from a customer to pay their debt. With the current proposal the risk is again moved to the public sector where they will take the part of the debt that Greece cannot pay or pay with difficulties.
So for the banks, it's a great move as their current contribution is just a small part from their revenue removed of the interest rate on the debt while lowering down the risks of unpaid debt.
Without forgetting that the ECB is feeding the banks with a preferential rate (around 1%) for credit given to other countries by the banks with a higher rate (around 3-4%).
So the winner is clearly the financial sector. We removed the risks for you and States will cover by public financing. It's just like the "refinancing" for CDO in 2008...