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Tuesday, November 29, 2011

Europe: EFSF viewed as insufficient, Greece to receive aid payment

by Calculated Risk on 11/29/2011 04:46:00 PM

• From the Athens News: Eurogroup signs off on 8bn euro aid payment

Eurozone finance ministers agreed on Tuesday to release an 8bn euro aid payment to Greece, part of an 110bn euro package of support agreed with the government last year ...
It looks like Greece will not default in December, but there is a huge hurdle in January when the private creditors are supposed to "voluntarily" agree to large haircuts.

• Surprise! The EFSF is insufficient.

From the WSJ: Euro Zone Sees Shortfall in Rescue Fund
Euro-zone finance ministers acknowledged on Tuesday that the bloc's bailout fund would have less capacity to help troubled nations than once hoped, and stepped up calls on the European Central Bank and the International Monetary Fund to come to their aid.

An analysis presented at a meeting of finance ministers here suggested the fund would be able to raise a maximum of €500 billion to €700 billion ($666 billion to $932 billion), far short of the €1 trillion or even €2 trillion that many had expected. ... ministers are exploring further measures to stem the crisis, which they hope to announce at a European summit on Dec. 8-9.
From the Financial Times: Fears of shortfall lead to moves to boost EFSF
Eurozone finance ministers are weighing more radical options to strengthen their firewall against the sovereign debt crisis, after acknowledging that plans to expand the €440bn eurozone rescue fund could deliver as little as half the extra punch that was anticipated.
Excerpt with permission
• European bond yields were mostly lower today after (from Bloomberg) Italy Pays More Than 7% at Auction of EU7.5 Billion of Bonds
Italy was again forced to pay above the 7 percent threshold that led Greece, Portugal and Ireland to seek bailouts when it sold 7.5 billion euros ($10.1 billion) in bonds today, short of the maximum target for the auction.
The Italian 2 year yield was down to 7.1%, and the 10 year yield was at 7.24%.

The Spanish 2 year yield was down to 5.6%, and the 10 year yield was down to 6.39%.

The Belgian 10 year yield was down to 5.33%, and the French 10 year yield was down to 3.52%.

Note: There is a link below the first post for the table of European bond yields.

• Tim Duy has more: Another European "Solution" Coming?

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