Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
You can see here the yield of German bonds in the secondary market.
The deal was struck at a rate of 4.83% for 3-year bonds. 200 basis points higher than IMF loans.

There is a 50 basis points surcharge added that brings the cost of the loans to Greece to 5.33%.

For 3 years' maturity the yield for German bonds is 1.34%, making the IMF spread 1.5% and the EU spread 4%
Greece did a deal just two weeks ago after the last so-called agreement where they sold 5 billion euros worth of 7-year bonds at a rate of 5.9%. The auction was oversubscribed.
The yield on German bonds for 7 years' maturity is 2.66%. This makes the market spread at that recent Greek auction 1.23%

Reuters: The yield on short-dated Greek government bonds fell by over a full point on Monday, after after euro zone finance ministers on Sunday approved a 30 billion euro aid mechanism for Greece.

The move took the 2-year bond yield to around 5.9 percent, below the 10-year bond yield, according to traders. That normalised the country's yield curve after it inverted last week on fears over Greece's ability to fund its debt. However, bid offer spreads were wide at around 90 basis points.


The Greek/German 10-year bond yield spread GR10YT=TWEB DE10YT=TWEB narrowed to 355 basis points versus 409 basis point at Friday's settlement close. The cost of protecting government debt against default in Greece and other peripheral euro zone member states tightened on Monday, according to credit default swap monitor CMA DataVision.

Note that this means that the yield for 2-year Greek bonds was 6.9%, above the 10-year bond yield (the curve was inverted due to fears over the short-term default prospects). A 5.33% cap on the interest rate up to 3 years helps bring the short-term rates lower though they still remain above the interest rate of the IMF/EU loans.

The brainless should not be in banking -- Willem Buiter
by Migeru (migeru at eurotrib dot com) on Tue Apr 13th, 2010 at 11:53:34 AM EST
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