Jay Mawji of Vantage FX (http://www.vantagefx.co.uk/) takes a look at news around the Eurozone on 6^th February 2012 – including news around bonds and bailouts at the start of February.

“They said that the deal would be done; that Greece would have agreed a bailout with the ‘Troika’ or lenders. They said they were close; that it would done by the end of January. Then they said it would be done by the end of last week. Now they are postponing the meeting until tomorrow.

Frustrations are clear to see around the world at the delay of Greece to agree a 50% haircut with the ‘Troika’ (lenders) and initiate an alternative bond for them, with a pre-agreed coupon rate. The lenders would like 4%, Greece and Eurozone ministers are offering 3.5% and in that 0.5% difference lies trillions of Euro’s worth of bailout funds and arguably the future of the Eurozone. There were great debates last year about creating a bailout package and building a strategy to path the roads away from the economic disaster. There was raging debate about how to restructure the Eurozone with leaders agreeing to new budget rules and Austerity measures. After that they agreed how funding would flow and that the ECB and the IMF would provide a bailout fund to help nations that required it.

Eurozone leaders initially supported Greek ministers who refused to agree a deal with the Troika for a 4% coupon. Now, the same leaders have become extremely agitated by the situation. Nikolas Sarkozy’s reaction to further delays in the meetings: “I honestly cannot understand how additional time will help. Time is of the essence. A lot is at stake for the Eurozone”. Angela Merkel now wants Greece to put debt payment funds in an escrow account to prevent such desperation occurring again. Understandably, leaders have become anxious to have a resolution, particularly as they face increasing unrest at home. Austerity measures have hit home for the people of the Eurozone, something they have not readily accepted.

The Troika’s have triumphed in Europe, until a deal has been done…”

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