On Tuesday evening German Chancellor Angela Merkel will meet IMF head Christine Lagarde in Berlin in order to discuss the Greek debt swap. EU officials need to reach an agreement on the maturity of the debt as well as the interest rate in order to finalize the rescue plan for Greece. Without it the country will most likely default.
Michael Conlon, FX Mentor at ForexNews.com, hopes today's meeting will bring some advances in this aspect: “Today Merkel is meeting with Lagarde of the IMF and there is renewed hope that they will further the mission of tackling the debt crisis. So far they are winning the PR battle and have kept the bond vigilantes away for now, though there is a lot of bond issuances due out over the course of the next month so they are not out of the woods just yet.”
Greece meanwhile held a debt auction today, which resulted in better than expected sale of 1.625 billion euros against a 1.25 billion euro target. The 6 month treasury bills have been sold at an average yield of 4.9%, lower than previous 4.95%.
Fitch: No rating cut for France in 2012; Italy, Spain at risk
Fitch rating agency announced on Tuesday that it does not anticipate France losing its AAA rating this year, despite putting it on negative outlook at the end of 2011. Spain and Italy though might witness a downgrade of their ratings by a notch or two.
The agency also affirmed that Austria is not at an immediate risk of a rating cut, despite the fact that the country's banks are considerably exposed to Hungarian debt. Germany and other EU member states with the highest credit rating and a stable outlook should stay safe unless the crisis in the area accelerated significantly.
ECB overnight deposits hit fresh record
The ECB overnight deposit level reached a new all-time high for the third consecutive day, data showed on Tuesday. Eurozone commercial banks held 482 billion euros at the ECB, which emphasizes the continuing pressure exerted by the EU crisis on the area's financial sector.