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The Board of Directors of the European Financial Stability Facility (EFSF) decided today to opt for a Reservation of Rights on EFSF loans to Greece, after the non-payment of Greece to the International Monetary Fund (IMF). Following the IMF Managing Director’s notification of the IMF Executive Board, this non-payment results in an Event of Default by Greece, according to EFSF financial agreements with Greece.
In line with a recommendation by the EFSF’s CEO Klaus Regling, the EFSF Board of Directors decided not to request immediate repayment of its loans nor to waive its right to action – the other two possible options. By issuing a Reservation of Rights, the EFSF keeps all its options open as a creditor as events in Greece evolve. The situation will be continuously monitored and the EFSF will consider its position regularly.
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The EFSF loans concerned are €109.1 billion under the Master Financial Assistance Facility Agreement, €5.5 billion under the Bond Interest Facility Agreement and €30 billion under Private Sector Involvement Facility Agreement.
The Greek non-payment has no influence on the EFSF’s capacity to repay its bondholders. Investors know that EFSF bonds benefit from a robust guarantee structure.