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$65bn is 18% of Greece's 2008 GDP. At 5.33%, servicing the debt will consume 1% of Greece's GDP and require a roll-over of the debt when the debt expires.

The roll-over is more problematic than the actual interest payments.

What this does is set a cap on the interest rate that Greece has to pay for up to $65bn of its debt. As you point out, the latest auction in the open market was oversubscribed at effectively a lower rate (given the longer maturity). Greece may still manage to auction its debt at a lower rate than the one offered by the EU/IMF and only turn to the EU/IMF for any unsubscribed debt. As somebody quoted in the comments, the loan "may not come to pass" and that would be a good thing because it would mean that Greek debt would be priced at a lower yield than this 5.33%.

The brainless should not be in banking -- Willem Buiter

by Migeru (migeru at eurotrib dot com) on Tue Apr 13th, 2010 at 11:44:41 AM EST
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There is a LOT of debt that will need to roll over in 2013-2015. That will make things difficult enough. Add to that problems in Spain, the U.K., Japan, China or the USA....  It is not like we have a stable system of international finance or that real, substantive reforms that would be adequate to the scale of the problems are likely.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Apr 13th, 2010 at 03:53:19 PM EST
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