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Last night, European leaders announced a €130 billion bailout for Greece, with the aim of getting the country’s debt-to-GDP ratio down to 120% by 2020.Nomura has assembled 7 key points on the latest Greek bailout.
- Greece has found another €325mn to cut.
- The Troika will now have a significant presence on the ground in Greece to make sure reforms are happening.
- An ‘escrow account’ — ensuring that all bailout money is prioritised for bondholders — will likely be established.
- The nominal haircut has increased to 53.3%, and the coupon on those bonds will be well below market rates.
- Profits from the Securities Markets Program will be given up to improve Greek debt sustainability.
- Other profits from Greek bonds held by National Central Banks will be given up to help Greece’s debt sustainability.
- A lowering of interest rates on all loans to Greece.
For more on some of the economic assumptions underpinning the whole deal, see here.