Markets News: Germany proposes 7-year extension of maturities on Greek bonds; Oil price rises as OPEC rejects production hike
By Finfacts Team
Jun 8, 2011 - 3:55 PM

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President Barack Obama shakes hands with Chancellor Angela Merkel of Germany following her remarks during the State Arrival Ceremony on the South Lawn of the White House, June 7, 2011.

Greece: The German government has proposed that Greece offer all holders of its sovereign bonds a 7-year extension of maturities as a condition of more financial aid from the EU's rescue fund, Wolfgang Schäuble, finance minister, said in a letter to his European Union colleagues,  the International Monetary Fund and the ECB, which was published on Wednesday.

Schäuble was in Washington DC on Tuesday where Chancellor Angela Merkel was on a state visit to the United States.

“Any additional financial support for Greece has to involve a fair burden sharing between taxpayers and private investors and has to help foster the Greek debt sustainability,” Schäuble said in the letter.

The ECB has not yet responded but Jean-Claude Trichet, the president, has said that he would be prepared to accept a scheme in which financial institutions in Europe were asked to maintain their level of outstanding credit to Greece.

"That is something, which is not a default, that the European Central Bank would consider appropriate," he said.

The EU is seeking to avoid a "credit event" that would trigger payments  of credit default swaps or insurance contracts on Greek debt, which would reward speculators against Greece.

The guidelines of the International Swaps and Derivatives Association, sets out the conditions, which determines whether credit events have taken place, and according to Reuters that while changing the terms of existing bonds is a credit event, an exchange of bonds for new ones with new terms is not one.

Also, the ECB, is holding €45bn worth of Greek government bonds, which it purchased in the secondary market from last May and it's anxious to avoid booking a loss on these bonds.

Greece has sovereign debt of about €340bn.

Greece's unemployment rate rose 16.2% in March from 15.9% in February, the country's statistics agency said Wednesday. The total number of Greeks unemployed was 811,340, up 40% from a year earlier, when the unemployment rate was 11.6%.

Also today in Athens, it's reported that about 300 radiology technicians became the latest group to protest in Athens. The technicians were protesting cuts to extra time off they receive due to their exposure to radiation at work.

Wolfgang Schäuble in the letter asks other Eurozone finance ministers to use their June 20 meeting to give Greece, and possibly the International Monetary Fund, a “clear mandate” to initiate the process of involving owners of Greek sovereign bonds.

Should the Eurozone fail to reach agreement on new payments to Greece by mid-July “we face the real risk of the first unorderly default within the Eurozone,” Schäuble said in the letter.

"We think that America’s economic growth depends on a sensible resolution of this issue,” President Obama said at a joint news conference with Chancellor Merkel in Washington yesterday.

Text of Letter

OPEC Meeting: No Agreement on Production:

Oil: Oil futures surged today after the OPEC (Organization of Petroleum Exporting Countries) cartel said it would leave production quotas unchanged.

Gulf states led by Saudi Arabia, the world's top exporter, had been pushing to raise quotas by 1m to 1.5mn barrels a day in response to triple-digit oil prices, the loss of Libyan exports and projections for continued economic growth during the second half of the year.

Last month, the International Energy Agency, the energy watchdog of 28 industrialised countries including Ireland, hinted that supplies could be released from strategic reserves if producers did not raise output.

Pfizer: The Wall Street Journal reports that Pfizer is looking for $1bn in extra yearly cost cuts on top of the billions of dollars in cuts to research and development that it was already making, according to people familiar with the matter.

US Markets

In New York Wednesday, the Dow fell 11 points or 0.09% to 12,060.

The S&P 500 slid 0.22% and the Nasdaq dipped 0.47%.

Live US Indices

European Markets

The pan-European Dow Jones Stoxx 600 slipped 0.85% Wednesday.

In Dublin the ISEQ has dipped 0.60%.

IL&P has dropped 9.47%; CRH fell 1.28%; Elan has added 2.08%.

European benchmarks

Irish share prices

Euribor Interest Rates


Crude oil for July delivery is currently trading on the Chicago York Mercantile Exchange (CME/Nymex) at $100.75 per barrel up $1.66 from Tuesday's close. In London, Brent for July delivery is trading on the International Commodities Exchange at $118.06 up $1.28.


The euro is trading at $1.4624 and at £0.8924.


Gold is trading at $1,537.20 per oz in New York.

The Finfacts Gold Page

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