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Hot Topic NBR Focus: GMO
Hot Topic NBR Focus: GMO
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Markets jump as Greek deal announced


Global financial markets heaved a collective sigh of relief this morning as a 109 billion euro bailout of the staggering Greek economy was announced.

Rob Hosking
Fri, 22 Jul 2011

Global financial markets heaved a collective sigh of relief this morning as a 109 billion euro bailout of the staggering Greek economy was announced.

The deal, which is extended also to the troubled Irish and Portuguese economies, means interest money owed by the three countries will be lowered by between 100 to 200 basis points to 3.5 % with repayment periods extended from the present seven years to a minimum of 15 years.

The New Zealand dollar – which yesterday hit a post-float record high of 86.40USc before falling away to 85.8c – leaped again to 85.42c on the news.

The Australian dollar rose an entire cent against the US currency, topping out just above $US1.08.

The bailout involves private sector banks swapping their Greek bonds for paper backed by European governments.

Large institutions such as Deutsche Bank, Munich Re, and HSBC Holdings have signed up to the deal thus far, which is being pitched as a “voluntary” deal for the private sector finance houses.

However, Dow Jones this morning quoted an anonymous EU official as saying “There was nothing really voluntary in this exercise,” and it is expected all three ratings agencies – Standard and Poors, Fitch and Moodys – will place Greece on “selective default status.”

The deal was seen as necessary to stop Greece’s massive debt problem rolling through into larger EU economies, with Italy being the next most likely to be affected.

Rob Hosking
Fri, 22 Jul 2011
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Markets jump as Greek deal announced
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