Greece faces another summer of deadlines for enormous debt repayments. Fifteen different obligations, totaling more than €15 billion ($16.78 billion), are due between June and mid-September, with Treasury bill holders owed the largest amounts, a combined €12.4 billion ($13.86 billion). Treasuries had been Greece’s main source of short-term funding until Europe and the IMF provided credit through a series of bailout programs.
But with the just-agreed, vaguely worded package of €10.8 billion ($11.48 billion) in fresh loans, a €7.5-billion installment to be paid in the second half of June, this summer may be less eventful than past ones, averting tense moments on the precipice of default before payment due dates.[1]
Most of Greece’s long-term debt, roughly two-thirds, is held by Europeans on “highly concessional terms,” as the International Monetary Fund described. Exceeding “120 percent of the country’s GDP,” the “weighted average grace and maturity periods [is] around 15 and 40 years, respectively, with a weighted average floating interest rate of around 1.2 percent.”[2]
As things stand now, “the current €16 billion loan from the IMF needs to be repaid by 2021, and the €20 billion bond holdings of the ECB and national central banks by 2026,” scholars at the Brussels-based Bruegel think tank explain. “The current stock of €3 billion pre-2012 bonds, which were not restructured in 2012, also needs to be repaid. Repayment of the remaining €31 billion bonds which resulted from the 2012 debt restructuring will start in 2023. The €53 billion bilateral loans from euro-area partners granted in the first financial assistance programme will have to be repaid between 2020-2041, according to current schedule.”[3]
Source: Wall Street Journal, May 26, 2016. www.wsj.com.
Source: IMF, “Greece: Preliminary Debt Sustainability Analysis—Updated Estimates and Further Considerations.” May 23, 2016. http://www.imf.org/external/pubs/ft/scr/2016/cr16130.pdf .
MATURITY, REPAYMENT, INTEREST RATES FOR DEBTS
Source: Fast FT, “Can Greece really pay back its debt?” May 23, 2016. www.ft.com .
It is unclear how the May 25 deal will alter this repayment structure since decisions about interest rate deferrals and caps were postponed until at least 2018. (An inventory of the debts through 2020 follows.) On May 25, Eurozone finance ministers and the IMF cleared the way for the release of €10 billion ($11.15 billion) in new loans for Greece. That move was cheered by the markets and may lead Moody's Investors Services, one of the “big three” credit rating agencies, to change its rating on Greece's debt on June 24.[4] Set now at Caa3 credit (CCC-), analysts forecast it will rise slightly to B-, the same as that of Standard & Poor’s. With that rating adjustment, the May 25 debt deal, and a sense that Greece is making progress, the country may return to global debt markets as early as next year to cover government funding shortfalls, Greece’s Deputy Finance Minister George Chouliarakis said.[5]
Projections by Trading Economics shows Greece’s government debt-to-GDP ratio hovering around 180 percent through 2020. However, the IMF sees that ratio soaring to 293.8 percent of Greece’s GDP by 2060 if there is no debt relief. All of these forecasts, though, rely on assumptions about the rate at which Greece can reverse the contraction of its economy (GDP in 2016 was 30 percent between the 2008 level).[6]
GREECE GOVERNMENT DEBT TO GDP
Source: Trading Economics, “Greece Government Debt to GDP Forecast 2016-2020.” http://www.tradingeconomics.com/greece/government-debt-to-gdp/forecast . “Government Debt to GDP in Greece is expected to be 183.33 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. In the long-term, the Greece Government Debt to GDP is projected to trend around 179.58 percent in 2020, according to our econometric models.”
IMF TRAJECTORY FOR GREEK DEBT WITH OR WITHOUT DEBT RELIEF
(Percentage of GDP)
Source: Jim Brunsden, “The IMF’s Greek debt options: what do they all mean?” FT Brussels Blog, May 20, 2016. http://blogs.ft.com/brusselsblog/2016/05/20/the-imfs-greek-debt-options-what-they-all-mean/ .
YIELD DROPS BELOW KEY 7-PERCENT LEVEL
Source: Lukanyo Mnyanda, “Greek Bond Yields Drop Below 7% After Bailout Payment Approved.” Bloomberg, May 25, 2016. http://www.bloomberg.com/news/articles/2016-05-25/greece-s-10-year-yield-drops-to-less-than-7-after-bailout-deal .
GREEK DEBT STRUCTURE, 2016 (JUNE) THROUGH 2020
(For interest rates not listed, see the explanatory note at the end of the chart.)
|
CREDITOR
|
AMOUNT (All amounts in Euros) |
DUE DATE |
INTEREST RATE
|
DESCRIPTION |
|
IMF |
299,084,589 | June 7, 2016 |
* |
Loan under IMF’s first bailout program for Greece in 2010 |
| Treasury bill holders | 1,600,000,000 |
June 10, 2016 |
2.70% | Short-term treasury bills |
| Treasury bill holders | 2,000,000,000 | June 10, 2016 | 2.97% | Short-term treasury bills |
| Treasury bill holders | 1,600,000,000 | June 17, 2016 | 2.70% | Short-term treasury bills |
| Treasury bill holders | 2,000,000,000 | July 8, 2016 | 2.97% | Short-term treasury bills |
| IMF | 448,626,883 | July 13, 2016 | * | Loan under IMF’s first bailout program for Greece in 2010 |
| Treasury bill holders | 1,000,000,000 | July 15, 2016 | 2.70% | Short-term treasury bills |
| ECB | 1,446,070,000 | July 20, 2016 | 3.60% | Bonds held by ECB exempted from the 2012 default |
| ECB | 821,800,000 | July 20, 2016 | 3.60% | Bonds held by national central banks exempted from the 2012 default |
| EIB | 20,000,000 | July 20, 2016 | 3.60% | Bonds held by EIB exempted from the 2012 default |
| Treasury bill holders | 1,000,000,000 | Aug. 5, 2016 | 2.97% | Short-term treasury bills |
| Treasury bill holders | 1,400,000,000 | Aug. 12, 2016 | 2.70% | Short-term treasury bills |
| Treasury bill holders | 1,400,000,000 | Sept. 2, 2016 | 2.97% | Short-term treasury bills |
| IMF | 299,084, 589 | Sept. 7, 2016 |
* |
Loan under the IMF’s first bailout program for Greece in 2010 |
|
IMF |
145,113,485 |
Sept. 19, 2016 |
** | Loan under the IMF’s second bailout for Greece in 2012 |
| Treasury bill holders | 1,400,000,000 | Oct. 7, 2016 | 2.97% | Short-term treasury bills |
| Treasury bill holders | 1,400,000,000 | Nov. 4, 2016 | 2.97% | Short-term treasury bills |
| IMF | 299,084,589 | Dec. 7, 2016 | * | Loan under the IMF’s first bailout program for Greece in 2010 |
| ESM | 3,000,000,000 | Feb. 20, 2017 | Loans made in the third bailout to fund bank recapitalization | |
| IMF | 145,113,485 | March 17, 2017 | ** | Loan under the IMF’s second bailout for Greece in 2012 |
| ECB | 48,000,000 | April 4, 2017 | Six-month Euribor +0.09% | Bonds held by ECB exempted from the 2012 default |
| ECB | 1,185,800,000 | April 20, 2017 | 5.90% | Bonds held by ECB exempted from the 2012 default |
| ECB | 168,000,000 | April 20, 2017 | 5.90% | Bonds held by national central banks exempted from the 2012 default |
| Private investors | 2,089,100,000 | July 17, 2017 | Bonds issued by Greece (2014 and later) | |
| IMF | 290,226,972 | July 18, 2017 |
** |
Loan under IMF’s second bailout for Greece in 2012 |
| ECB | 2,412,206,000 | July 20, 2017 | 4.30% | Bonds held by ECB exempted from the 2012 default |
| ECB | 1,455,700,000 | July 20, 2017 | 4.30% | Bonds held by national central banks exempted from the 2012 default |
| EIB | 10,000,000 | July 20, 2017 | 4.30% | Bonds held by the European Investment Bank exempted from the 2012 default |
| ESM | 3,000,000,000 | Aug. 20, 2017 | Loans made in the third bailout to fund bank recapitalization | |
| IMF | 145,113,485 | September 19, 2017 | ** | Loan under IMF’s second bailout for Greece in 2012 |
| IMF | 156,284,040 | Dec. 4, 2017 | ** | Loan under IMF’s second bailout for Greece in 2012 |
| IMF | 290,226,972 | Jan. 18, 2018 | ** | Loan under the IMF’s second bailout for Greece in 2012 |
| IMF | 156,284,040 |
Jan. 31, 2018 |
** | Loan under the IMF’s second bailout for Greece in 2012 |
| ESM | 4,000,000,000 | Feb. 20, 2018 | Loans made in the third bailout to fund bank recapitalization | |
| IMF | 145,113,485 | March 19, 2018 | ** | Loan under the IMF’s second bailout for Greece in 2012 |
| IMF | 156,284,040 | June 4, 2018 | ** | Loan under the IMF’s second bailout for Greece in 2012 |
| ECB | 14,000,000 | July 5, 2018 | Six-month Euribor +0.09% | Bonds held by ECB exempted from 2012 default |
| IMF | 290,226,972 | July 18, 2018 | ** | Loan under the IMF’s second bailout for Greece in 2012 |
| ECB | 1,255,900,000 | July 20, 2018 | 4.60% | Bonds held by ECB exempted from the 2012 default |
| ECB | 590,480,000 | July 20, 2018 | 4.60% | Bonds held by national central banks exempted from the 2012 default |
| EIB |
10,000,000 |
July 20, 2018 | 4.60% | Bonds held by European Investment Bank exempted from the 2012 default |
| IMF | 156,284,040 | July 31, 2018 | ** | Loan under the IMF’s second bailout for Greece in 2012 |
| IMF | 145,113,485 |
Sept. 19, 2018 |
** | Loan under the IMF’s second bailout for Greece in 2012 |
| IMF | 312,568,080 | Dec. 3, 2018 | ** | Loan under the IMF’s second bailout for Greece in 2012 |
| IMF | 156,284,040 | Dec. 4, 2018 | ** | Loan under the IMF’s second bailout for Greece in 2012 |
| IMF | 290,226,972 | Jan. 18, 2019 | ** | Loan under the IMF’s second bailout for Greece in 2012 |
| IMF | 156,284,040 | Jan. 31, 2019 | ** | Loan under the IMF’s second bailout for Greece in 2012 |
| ECB | 17,117,000 | March 11, 2019 | 5.00% | Bonds held by ECB exempted from the 2012 default |
| IMF | 145,113,485 | March 19, 2019 | ** | Loan under the IMF’s second bailout for Greece in 2012 |
| Private investors |
4,030,800,000 |
April 17, 2019 | Bonds issued by Greece (2014 and later) | |
| IMF | 312,568,080 | June 3, 2019 | ** | Loan under the IMF’s second bailout for Greece in 2012 |
| IMF | 156,284,040 | June 4, 2019 | ** | Loan under the IMF’s second bailout for Greece in 2012 |
| IMF | 290,226,972 | July 18, 2019 | ** | Loan under the IMF’s second bailout for Greece in 2012 |
| ECB | 3,317,950,000 | July 19, 2019 | 6.00% | Bonds held by ECB exempt from the 2012 default |
| ECB | 434,500,000 | July 19, 2019 | 6.00% | Bonds held by national central banks exempted from the 2012 default |
| IMF | 156,284,040 | July 31, 2019 | ** | Loan under IMF’s second bailout for Greece in 2012 |
| IMF | 145,113,485 | Sept. 19, 2019 | ** | Loan under the IMF’s second bailout for Greece in 2012 |
| ECB | 1,450,650,000 | Oct. 22, 2019 | 6.50% | Bonds held by ECB exempt from the 2012 default |
| ECB | 561,869,732 | Oct. 22, 2019 | 6.50% | Bonds held by national central banks exempted from the 2012 default |
| EIB | 5,000,000 | Oct. 22, 2019 | 6.50% | Bonds held by the EIB exempt from the 2012 default |
| IMF | 312,568,080 | Dec. 3, 2019 | ** | Loan under the IMF’s second bailout for Greece in 2012 |
| IMF | 156,284,040 | Dec. 4, 2019 | ** | Loan under the IMF’s second bailout for Greece in 2012 |
| IMF | 290,226,972 | Jan. 17, 2020 | ** | Loan under the IMF’s second bailout for Greece in 2012 |
| IMF | 156,284,040 | Jan. 31, 2020 | ** | Loan under the IMF’s second bailout for Greece in 2012 |
| IMF | 145,113,485 | March 19, 2020 | ** | Loan under the IMF’s second bailout for Greece in 2012 |
| IMF | 312,568,080 | June 3, 2020 | ** | Loan under the IMF’s second bailout for Greece in 2012 |
| IMF | 156,284,040 | June 4, 2020 | ** | Loan under the IMF’s second bailout for Greece in 2012 |
| Eurozone governments | 181,250,000 | June 15, 2020 | Loans from other Eurozone countries to Greece under the first bailout | |
| ECB | 1,132,350,000 | June 19, 2020 | 6.25% | Bonds held by ECB exempt from the 2012 default |
| ECB | 234,000,000 | June 19, 2020 | 6.25% | Bonds held by national central banks exempt from the 2012 default |
| IMF | 290,226,972 | July 17, 2020 | ** | Loan under the IMF’s second bailout for Greece in 2012 |
| IMF | 156,284,040 | July 31, 2020 | ** | Loan under the IMF’s second bailout for Greece in 2012 |
| Eurozone governments | 262,500,000 | Sept. 15, 2020 | Loans from other Eurozone countries to Greece under the first bailout | |
| IMF | 145,113,485 | Sept. 18, 2020 | ** | Loan under the IMF’s second bailout for Greece in 2012 |
| IMF | 312,568,080 | Dec. 3, 2020 | ** | Loan under the IMF’s second bailout for Greece in 2012 |
| IMF | 156,284,040 | Dec. 4, 2020 | ** | Loan under the IMF’s second bailout for Greece in 2012 |
| Eurozone governments | 262,500,000 | Dec. 15, 2020 | Loans from other Eurozone countries to Greece under the first bailout | |
*1.05% plus surcharges between two and three percentage points
**An Extended Fund Facility; loans charged at 1.05% with surcharges between two and three percentage points
Note: The interest on other debt obligations not listed above Breugel calculates to be a “weighted average floating interest rate of around 1.2 percent.” As they explain, “According to our calculations, the current ESM funding rate for Greece is about 0.7% per year, while the EFSF loans cost about 1.2% (the average funding costs of these institutions, considering outstanding bonds and new bonds and bills to be issued in 2016). Since higher-yielding bonds issued in earlier years will gradually mature and will be replaced by lower-yielding bonds, even these low average funding costs are expected to fall further till about 2020 according to market-based expectations, after which a slow increase is expected to about 1.5% in 2030. The 3-month Euribor (to which the interest rate of the €53bn bilateral loans is linked) is expected to remain negative until 2019 and only a small increase is expected thereafter.” The debt agreement reached between Greece the Eurozone finance ministers on May 25 includes a waiver of an interest rate increase that was due in 2017.
Source of compilation: Wall Street Journal, May 26, 2016, based on information from the Government of Greece Public Debt Management Agency (www.pdma.gr), the IMF (www.imf.org), and the European Commission (www.ec.europa.eu).
[1]Jan Strupczewski and Francesco Guarascio, “Euro zone, IMF reach compromise deal on Greek debt relief.” Reuters, May 25, 2016. http://ec.europa.eu/economy_finance/assistance_eu_ms/greek_loan_facility/index_en.htm .
For background information on the debt agreements between the Eurozone finance ministers, the IMF, and Greece, see: http://ec.europa.eu/economy_finance/assistance_eu_ms/greek_loan_facility/index_en.htm .
[2]IMF, “Greece: Preliminary Debt Sustainability Analysis—Updated Estimates and Further Considerations.” May 23, 2016. http://www.imf.org/external/pubs/ft/scr/2016/cr16130.pdf .
[3]Zsolt Darvas and Pia Hüttl, “Is Greek Public Debt Unsustainable?” Breugel blog post, May 7, 2016. http://bruegel.org/2016/05/is-greek-public-debt-unsustainable/ . Also, see: Alex Barker and Mehreen Khan in Brussels and Shawn Donnan, “Messy Greek debt deal leaves key questions unanswered.” Financial Times, May 25, 2016. www.ft.com.
[4]After the May 25 announcement, Moody’s issued a statement: "The Eurogroup ... provided a road map on debt relief, which is credit positive as it signals a growing consensus among euro area member countries and the institutions, namely the IMF and the European Commission, on debt relief.”
[5]Nektaria Stamouli, “Greece Plans Return to Debt Markets in 2017.” Wall Street Journal, May 26, 2016. www.wsj.com
[6]Michalis Nikiforos, Dimitri B. Papadimitriou, and Gennaro Zezza. “The Greek Public Debt Problem.” Levy Economics Institute of Bard College May 2016. http://www.levyinstitute.org/pubs/wp_867.pdf .
