Yesterday afternoon, CNBC reported that plans were in motion to use EFSF funds to set up an SPV via the European Investment Bank. The SPV would then issue bonds and buy sovereign debt. This, according to an unnamed European official.
Stocks rallied into the close of yesterday’s trading.
However, earlier today, the EIB said it was never approached about such a plan.
And then this afternoon, the Financial Times reported that seven of the 17 Eurozone member nations were demanding that private creditors should take bigger haircuts on their Greek bond holdings. This according to unnamed European officials.
From the FT:
While hardliners in Germany and the Netherlands are leading the calls for more losses to be imposed on the private sector, France and the European Central Bank are fiercely resisting any such move. They fear re-opening the bond deal could spark renewed selling of shares in European banks, which have significant holdings of Greek and other peripheral eurozone debt.
…”In Germany, there are the hardliners and there are the moderates,” said one senior European official. “This is the hardliners’ stance.”
The thought of gridlock in the Eurozone may have caused stocks to sell off during the final hour of today’s trading.
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