Spreadex Market Update
Euro shares climb
To reduce the debt pile, ministers agreed to cut the interest rate on official loans, extend the maturity of Greece's loans from the EFSF bailout fund by 15 years to 30 years, and grant a 10-year interest repayment deferral on those loans.
According to European Central Bank executive board member Benoit Coeure, sovereign bonds of euro zone countries that require assistance will be bought under the condition that they agree to fiscal adjustment programmes.
The launch of the Outright Monetary Transactions (OMT) bond-buying programme has helped calm financial markets and bring down sovereign bond spreads for troubled countries, including Spain who the markets expects will seek a bailout.
Over in the States, the Federal Reserve has drawn up plans to force foreign lenders to comply with tougher capital rules. This may force non U.S. firms to house all of their business within a U.S. holding company. That means local units would have to meet minimum capital standards regardless of their parents’ resources.
The treatment could force foreign banks to inject capital into their U.S. units and limit their ability to move funds across borders.
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