Greek Debt Composition 2012

One reason the Northern European countries bailout out Greece was because banks, for example German en French banks, heavily invested in Greek government debt. Since then the European Commission (EFSF) and the ECB have bought quite a lot of debt from the banks. This means that the bond holders of Greek debt shifted from only private parties to mostly public holders now.

This means that when there would be a second round of writedowns on Greek debt the European tax payer will have to pay as well.

Greek Rescue Deal & EFSF Enlargement Graphed

Key Points:

1. Private sector writes off 50% of Greek Government debt.
2. EFSF bailout fund scaled up to 1 trillion.
3. European Banks to be recapitalized with 100 billion euros.
4. Second bailout-package for Greece is 130 billion euros with EFSF-money, instead of 109 billion agreed in July 2011.

EFSF Guarantees Per Country (Total And Per Capita)

The EFSF is the Euro Zone Bailout Fund. Established on May 9 2010 and located in Luxembourg (registered as a company from Luxembourg).

In the last few weeks all 17 Euro Zone Members have ratified the bigger Euro Bailout Fund. The EFSF can now lend out 440 billion euros. In July Euro Zone leaders have agreed to a few amendments to the EFSF. It will also be able to finance recapitalization of financial institutions to through loans to governments. It can also intervene in the secondary markets (buy bonds on the markets of countries losing confidence from the markets) on the basis on an ECB analysis to avoid contagion. Lately the question has been raised by many whether the current amount of the EFSF is enough. Certainly not if Italy and Spain need bailout money as well.

In this chart the updated committed guarantees per country are pictured on the upper side and the guarantees person on the lower side of the graph. As you can see Germany is the biggest contributor to the EFSF with 211 billion euros committed guarantees. Luxembourg has the highest committed guarantees per person.

Note: K=1000. So 100K = 100 billion euros.

Eurozone Future According To J.P. Morgan

ZeroHedge published this graph from J.P. Morgan which visualizes one scenario of the future of the Eurozone in a war map.

1. ECB purchases bonds in secondary market.
2. EFSF expanded to 440bn Euros - expected to happen this fall.
3. EFSF will lend to Spain and italy.
4. Increase EFSF to 1.0-1.5 trillion.
5. EU asks IMF to increase its share in the EFSF fund.
6. Allow EFSF to the rated AA, to increase its lending capacity.
7. Same as 4.
8. Eurobonds.

ZeroHedge

Euro Bailout Fund Compared to Potential Financial Needs

On the top side of this graphic you can see the size of the Euro Bailout mechanism (EFSF). If the remaining 185 billion is approved by the Euro Zone parliaments the EFSF fund will have 440 billion to lend out. In the PIIGS countries total bonds that will mature up untill the end of 2013 totals 795 billion.

The bailout fund could be big enough for Spain, but not for Spain and Italy.

Der Spiegel

Current (EFSF) and Future (ESM) Euro Bailout Mechanims

This graph from Der Spiegel shows what the current Euro bailout fund is made of (called the EFSF) and on the right you can see the funding of the bailout fund from 2013; the Capital and Guarantees per country in billion euro's.

Der Spiegel

EU Bailout Fund (EFSF) Guarantees Per Country

The EU Bailout Fund for countries in financial problems called the European Financial Stability Facility has been created in may 2010. The EFSF lends on the financial markets by issuing bonds. These bonds are of the highest quality because the money is guaranteed by AAA-countries (with the highest credit ratings in the world). These countries are: Germany, France, Netherlands, Finland, Austria and Luxembourg.

The Wall Street Journal explains the difference between the current form of the EFSF and how it will change this fall:

''EFSF 1.0 (which is the current version) uses an absurdly complicated combination of prepaid interest, cash buffers, overguarantees and the like to ensure that all its debt issues are backed by triple-A guarantees or cash. EFSF 2.0, expected to be ratified this fall, makes things (relatively) simpler.

In EFSF 2.0, all the 17 countries pledge guarantees totaling €779.8 billion. Subtracting the guarantees of bailed-out Greece, Ireland and Portugal brings the total down to €726 billion. The countries agree that every EFSF bond will be backed by up to 165% of its size in guarantees, so the EFSF can borrow a maximum of €440 billion (since €440 billion x 1.65 = €726 billion).''

In total the EFSF 2,0 requires 450 billion euro's of guarantees by AAA-Countries. If France loses it's AAA-rating the other countries see their guarantees raise by 54%.

How Will Greece Use The Second Public Bailout Money?

On the 21 of July Euro Zone leaders announced that Greece will get a second public bailout from the Euro Zone Countries (Lend by the EFSF bailout fund) and the IMF. The second bailout amounts 109 billion. This graph shows how the second public bailout out money will be used by Greece:

• 34 billion to refinance its debt.
• 20 billion to recapitalize Greek banks.
• 20 billion to buy back Geek Bonds, which will result in a 12,6 billion decline in the Greek Debt.
• 35 billion for collateral (AAA-loans from EFSF) for extending the bonds by the private sector (private sector bail out). 
• The assumption is that Greece will raise 28 billion by privatization. If it will not the 109 billion public bailout will have to rise.

Bailouts of Greece, Ireland and Portugal in Perspective

This infograph from Der Spiegel compares the three bailouts and their creditors.

Update: notice only the first bailout for greece has been pictured. The second bailout is 130 billion euro's.

Source: Der Spiegel

Who's paying for the euro-area bail-out?

This great graph from The Economist show who pays for the Euro(pean) bail out funds.

Due to a request by the Economist this graph has been removed. 

View the graph here