EU leaders backed Greece over its debt crisis on Friday as Brussels agreed to levy interest rates below the market level if Athens is forced to seek emergency EU-IMF action to prevent default.
After several top leaders said the EU would help Greece at any time it asked, eurozone officials set the interest rate Athens would have to pay for rescue funds at below-market rates, a key move in resolving an issue that has rocked Europe for months.
“There is agreement on the interest rate which will be applied for Greece, should it call for an aid plan,” one diplomat in Brussels said on condition of anonymity after talks between the 16 eurozone countries.
A previous deal agreed by EU leaders late last month did not specify the terms under which last-resort assistance from the European bloc, backed by the IMF, would be made available.
“It is lower than the current market rate for Greek debt,” another diplomat said, referring to rates that soared past 7.5 percent on Thursday. “But it’s not gift-wrapped either — it’s [still] higher than that for a country with an AAA rating from international credit rating agencies.”
“That will allow Greece ... if this mechanism is put in place, to re-finance itself at cheaper levels than on today’s market,” the diplomat added.
Amid growing speculation that a rescue deal was in the offing, Greek Prime Minister George Papandreou held talks with several EU leaders late on Friday.
The talks by phone involved EU President Herman Van Rompuy, European Central Bank chief Jean-Claude Trichet, EU Commission head Jose Manuel Barroso and Eurozone finance chief Jean-Claude Juncker, Papandreou’s press office said.
With the news appearing to be going in Greece’s favor, the yield on the benchmark 10-year Greek government bond fell back sharply on Friday to just over 7 percent in late trade.
That is still very high compared with German bonds, for example, but a large improvement and with the prospect that the eurozone accord could see it go lower still if Athens can get cheaper funds from the EU.
Earlier on Friday, Van Rompuy gave Greece his backing, telling journalists from a handful of European newspapers: “The Greek government is courageous and is breaking with the past. We would be ready to intervene if the Greeks ask us to.”
French President Nicolas Sarkozy said the EU was ready to activate its rescue scheme “at any time to come to Greece’s aid,” in remarks after discussions with Italian Prime Minister Silvio Berlusconi.
Germany also said that the EU-IMF rescue scheme could be activated quickly, although government spokesman Michael Offer again stressed that Greece could solve its problem by focusing on budget cutbacks.
However, Fitch Ratings took a hard line, saying it had downgraded Greece’s debt ratings because of the challenge the country faces in managing its public finances.
Fitch said it cut Greece’s long-term foreign and local currency Issuer Default Ratings to BBB- from BBB+.
It also slashed the credit rating of five banks, including National Bank of Greece, which was reduced from BBB to BBB-.
Greece has faced increasing difficulties in raising fresh money on financial markets to cover its obligations and ratings downgrades normally increase a country’s borrowing costs.
Fitch warned that it was “vital that the Greek authorities import credibility from external institutions, underpinned by a credible commitment of financial support.”
Fitch and two other leading agencies, Moody’s and Standard & Poor’s, all downgraded their Greek ratings in December as the country’s debt crisis intensified, calling into question the eurozone’s credibility as a whole.
Softbank Group Corp plans to keep a stake in the chip designer Arm Ltd, even if it sells a partial interest to Nvidia Corp, the Nikkei reported. The companies are negotiating terms, the newspaper reported, citing sources. Softbank might take a stake in Nvidia after it buys Arm, the report said. Nvidia and Arm might also merge through a share swap, and Softbank would become a major shareholder in the combined company, it said. The two parties aim to reach a deal in the next few weeks, the sources said, asking not to be identified because the information is private. Nvidia is the
END TO SPECULATION: The hotel’s management contract has been extended, despite reports that it wanted to end its alliance with Hyatt Hotels over a deal with Riant Capital Singapore-based Hong Leong Hotel Development Ltd (豐隆大飯店股份) yesterday said it has extended a management contract to ensure the continued presence of the Grand Hyatt brand in Taipei, ending rumors that the two sides were parting ways. “We are pleased Hyatt is able to come to terms on the extension of the management contract of Grand Hyatt Taipei,” said Kwek Leng Beng (郭令明), executive chairman of City Developments Ltd (城市發展) and Millennium & Copthorne Hotels Ltd (千禧國敦酒店). Hong Leong Hotel Development is a subsidiary of Millennium, and both fall under the Hong Leong Group (豐隆集團). The Grand Hyatt Taipei (台北君悅大飯店), owned and built by
MOVING FROM CHINA? The article did not name the company, but Foxconn, Wistron and Pegatron were among firms chosen for a production-linked incentive plan in India An Apple Inc vendor is looking at shifting six production lines to India from China, which could result in US$5 billion of iPhone exports from the South Asian nation, the Times of India reported, citing people familiar with the matter who it did not identify. The establishment of the facility would create about 55,000 jobs over about a year, the newspaper reported, not naming the Apple vendor. It would also cater to the domestic market and expand operations to include tablets and laptops, the newspaper reported. Samsung Electronics Co and Apple’s assembly partners are among 22 companies that have pledged 110 billion
’WHITE BOX’: The open platform would give local firms access to Cisco’s cloud-based mobile network to develop 5G telecom equipment and tap into the global market The Ministry of Economic Affairs (MOEA) yesterday introduced a new 5G “open lab” in collaboration with US-based information technology and networking giant Cisco Systems Inc to address the rapidly growing “white box” 5G networking equipment market. The open lab will be a platform where Taiwanese manufacturers can access Cisco’s cloud-based mobile network to develop their own 5G telecom equipment, such as small-cell base stations, network switches, modems and Internet of things (IoT) devices, a ministry statement said. The open platform would allow Taiwanese manufacturers to tap into the lucrative 5G telecom equipment market, which was previously monopolized by Nokia Oyj, Ericsson AB