NO OTHER TAKERS
Under the complicated collateral model, which found no other takers than Finland, Athens will lend Greek banks its own sovereign bonds which will be swapped into other Greek government bonds and transferred to an investment bank for sale.
The revenue from the sale will be put into an escrow account and invested in triple-A bonds, which are the collateral.
The collateral applies to 40 percent of Finland's total share of the loans, 2.2 billion euros ($2,9 billion).
But in order to secure its guarantees, Finland must first pay its share of 1.4 billion euros into Europe's permanent stability fund (ESM) in one tranche instead of five, meaning more interest costs.
It will also accept smaller profits from the temporary stability fund (EFSF), and in case of a default, the collateral will be frozen for 30 years.
It is as complicated as it sounds and was designed to make Finland's demand so expensive that no other euro zone country would ask for the same. To that extent, it has worked.
Full Story: Reuters
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