IMF Proposes Tough Task for ESM as Greece Seeks Sustainable Debt
- Fund suggests ESM issue long-dated bonds to lock in low rates
- Move will ‘buy further time for Greece’: Smith & Williamson
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As European finance ministers meet in Brussels to decide on the next bailout payment to Greece, the International Monetary Fund has come up with a solution to reduce financing costs that may leave the bond market with indigestion.
The IMF suggested in a report that the European Stability Mechanism, the euro area’s crisis-fighting fund, sell 200 billion euros ($224 billion) in long-dated bonds to lock in record-low borrowing costs to refinance Greece’s debt. That would compete with governments including France and Spain that recently boosted their multi-decade bond sales.