[credit provider=”Oli Scarff/ Getty Images”]
Greece? We’re still talking about Greece?Yes we are. Last night, European leaders agreed to a deal that will allow Greece to get 44 billion more Euros in three tranches.
In a note to clients this morning, SocGen’s Kit Juckes declared: “World record can-kicking attempt successfully achieved.”
So what are the terms/premise?
We summarize in bullets a note from SocGen’s Michala Marcusen:
- Greece gets more breathing room: Goal of 4.5% of GDP primary surplus postponed from 2014 to 2016.
- Greek loan rates are lowered by 100 basis points.
- Maturity on loans extended by 15 years (reducing payments).
- Lower EFSF fee.
- Other countries to forgo profits on Greek debt that has been purchased by the ECB.
- Greece may do a debt buyback.
- Goal is to get Greek debt down to 122% of GDP in 2020.
One thing everyone is talking about: The need to do some kind of big debt haircut, whereby official entities (ECB, etc.) do writedowns.
That seems to be consensus, although Dan Gros at FT argues that it’s overrated, and that actually Greece’s annual debt service costs as a % of GDP aren’t really that high, so should be doable.