PARIS (MNI) – The Institute for International Finance, which is
representing large global banks in negotiations for a 50% writeoff of
their sovereign Greek bonds, on Wednesday welcomed the approval by euro
area finance ministers of a plan intended to bolster the financial
capacity of Europe’s bailout fund, the EFSF.
The plan, approved by the ministers late Tuesday, authorizes the
EFSF to insure 20% to 30% of the nominal value of sovereign Eurozone
bonds purchased by investors and to create multi-layered co-investment
funds, which would mingle public and private money and could be used to
help troubled sovereign governments or banks.
However, the finance ministers conceded that their plan for the
EFSF would fall far short of E1 trillion they had originally hoped for.
Estimates were closer to half that amount. They said they are seeking
other ways to address the growing Eurozone crisis, including additional
EFSF leveraging options and possible funding from the International
Monetary Fund.
A verbatim text of the IIF statement is below:
“The Institute of International Finance (IIF) welcomes the
decisions by the Euro Area Finance Ministers on November 29 to
strengthen the European Financial Stability Facility. The EFSF has thus
been authorized to offer partial-risk protection of 20-30 percent to a
newly issued bond of a member state. On its funding side, the EFSF can
now issue short-term bills and use government bonds it may have
purchased on secondary markets for repo transactions.
Charles Dallara, Managing Director of the IIF, said: “These
decisions have enhanced the capacity and flexibility of the EFSF to help
Euro Area member countries which are putting in place measures to
restore market confidence. They are important political and technical
steps in the direction of deepening economic and fiscal integration in
the Euro Area that would address the current sovereign debt problem.”
–Paris newsroom, +331-42-71-55-40; bwolfson@marketnews.com
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