The euro has strengthened significantly over the past 24 hours as EU officials finalize a prescription for Greece. Here are the details:
- bilateral loans from European governments for 3 years
- up to €30bn lending by euro area members states for the first year, in addition to the IMF’s contribution (€12.5 to 15bn reportedly)
- lending rates near 5% calculated as 3-month euribor plus 300bp spread with further 100bp for more than 3 years and plus 50bp for operational cost
- IMF loans priced according to their formula (currently 3.25% for a loan of 10x quota)
The package is larger than the market had anticipated and the rate is much lower than market rates.