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Athens by the Alps: How the Eurozone Bailouts Made Interest Rates History

The €215 billion lent to Greece by her Eurozone siblings are likely among the very cheapest funding ever enjoyed by a sovereign borrower. Not only would the effective net interest rate so far be negative, but actually more so than those faced by essentially all countries lucky enough to have been able to issue negatively-yielding debt of similar maturity. If, as data and reports seem to confirm, the period of negative yields witnessed in the sovereign bond market in the past couple of years would constitute a historical outlier and aberration then the effective rate that the Eurozone did afford and wanted to afford Greece would indeed be one of the very lowest (if not the lowest) in History. Only Switzerland may have a claim to a more negative similarly-dated funding. The main purpose of this brief analysis is to illustrate how incredibly generous the bailout loans granted to Greece have been, not just in nominal terms or in the current context but crucially also from a historical perspective.