We finally got what was missing from last month’s agreed upon EC and IMF backstop for Greece, which are the details and an agreement from the Germans to lend money at below market rates. The EU will provide up to 30b euros and the IMF will be there on 15b euros. This remains a last resort as it will only be released if Greece cannot tap the capital markets to meet their upcoming maturities. What also doesn’t change is the tough economic outlook and lack of competitiveness in Greece that has to be addressed as the deal is only a temporary respite. Greek 2 yr note yields are falling by 135 bps to 5.5%, the 10 yr yield is down 62 bps to 6.5%, 5 yr CDS is narrower by 78 bps to 348 bps and Greek stocks are up by 4.6%. European stocks elsewhere are quiet because Friday’s rally celebrated the bailout news. Also, March bank loans in China rose 198b yuan less than expectations, totaling 511b. Bank loans ytd are up 2.6b yuan vs 4.6b in Jan-Mar ’09. Chinese banks are also being asked to raise down payment requirements for 2nd mortgages to up to 60% of the property’s value.
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