February 21, 2012
Debt-stricken Greece won a second bailout after European governments wrung concessions from private investors and tapped into European Central Bank profits to shield the euro area from a precedent-setting default.
Finance ministers awarded 130 billion euros ($173 billion) in aid, engineered the central-bank profits transfer and coaxed investors into providing more debt relief in an exchange offer meant to tide Greece past a bond redemption next month.
Bondholders’ response to the swap, Greece’s tolerance of more austerity and a gantlet of parliamentary approvals in northern European countries gripped by an anti-bailout mindset loom as risks to the latest salvage operation.
“Everybody understood that this was the moment of truth,” Belgian Finance Minister Steven Vanackere told reporters early today after 13 1/2 hours of talks in Brussels.
The assistance brings to at least 386 billion euros the sums spent or committed to save Greece, Ireland and Portugal from bankruptcy, and to insulate Europe from a ruinous financial cascade that might endanger the 13-year-old monetary union.
The accord lifted the 17-nation euro. It rose as high as $1.3293 and traded at $1.3266 at 7:18 a.m. Brussels time, up 0.2 percent on the day. In Asia, stocks pared losses and Treasuries retreated. The MSCI Asia Pacific Index of equities was down 0.4 percent as of 2:33 p.m. in Tokyo, after dropping as much as 0.7 percent earlier in the day. Yields on benchmark 10-year U.S. notes rose 3 basis points to 2.04 percent.
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