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Greece Bailout Saga Ends

Greece Bailout Saga EndsGreece Bailout Saga Ends

Greece’s eurozone creditors struck a landmark deal to ease repayment terms on some of the nation’s mountain of debt, clearing the way for the country to exit the lifeline that’s kept it afloat since 2010.

The debt compromise reached in Luxembourg by the bloc’s finance ministers comes after months of acrimonious talks and just as the Mediterranean nation is set to leave its bailout program in August. A deal to ease Greek debt has long been seen as a key ingredient in the country’s successful return to economic health and foray back into financial markets, Bloomberg reported.

The deal was struck in the early hours of the morning as attempts to find a compromise repeatedly hit a wall. The biggest holdout was Germany, which resisted granting Athens more money. In the final compromise, Berlin signed off on a longer maturity extension but managed to limit the tranche of bailout money.

“After eight long years Greece will finally be graduating from its financial assistance,” said Portuguese Finance Minister Mario Centeno, who presides over the meetings with his eurozone counterparts. “This is it.”

Greek bonds rose following the Eurogroup decision, with the yield on its 10-year debt falling 23 basis points to 4.01%. The spread over comparable German bonds narrowed to 375 basis points.

Under the agreed debt-relief plan, maturities on €96.6 billion ($112 billion) of loans Greece has received from its second bailout would be pushed out by 10 years. The extension will be accompanied by a 10-year grace period in interest and amortization payments on the same loans.

Both these steps are part of a broader package of measures aimed to ensure that Greece will be able to service its debt over the next decades.

Caption

Greek FM Euclid Tsakalotos (R) speaks with the EC’s Pierre Moscovici (2nd L) during a meeting of eurogroup finance ministers at EU headquarters in Luxembourg, on Thursday.

 

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