UPDATE 2-Details agreed for euro zone loan vehicle – sources

* Deal reached on details of SPV, needs ministers’ approval

* SPV intended to help struggling euro zone countries

(Adds EIB role, background)

By Jan Strupczewski and Julien Toyer

BRUSSELS, June 4 (BestGrowthStock) – Euro zone experts have agreed
on the technical aspects of the special purpose vehicle (SPV)
for helping euro area countries that run into borrowing
difficulties, European Union sources said on Friday.

The agreement on the SPV, which could borrow up to 440
billion euros ($536.2 billion) with euro zone guarantees, will
require the approval of euro zone finance ministers at a meeting
in Luxembourg at the start of next week.

“We already have an agreement, all the technical modalities
we agreed on now need to be rubber-stamped by the ministers,”
one senior euro zone source involved in the talks said.

“The mechanism has been agreed, it is fully on track and
nobody will be able to block it,” the source said.

The SPV is part of a joint safety net for euro zone
countries in trouble set up by the members of the single
currency area and the International Monetary Fund (IMF) and
worth a total of 750 billion euros.

Of that total the SPV would provide 440 billion, 60 billion
would come from the EU budget and 250 billion from the IMF.

It is a separate undertaking from a 110 billion three-year
emergency loan package for Greece agreed by the euro zone and
the IMF, which is based on bilateral loans from euro zone
governments and the IMF to Athens.

In the case of the SPV, unlike in the case of Greece, there
would be no bilateral government loans. The SPV would borrow on
the market by issuing bonds which would have guarantees from the
members of the single currency area.

The SPV would then lend the money to the country in need,
adding a mark-up that would make the financial conditions of the
loan roughly comparable to conditions set by the International
Monetary Fund for Greece, a second eurozone source said.

Once the country repays the loans to the SPV, the vehicle
would repay its own lenders.

There would be no need for the SPV to ask national
parliaments for approval of its actions each time it had to
borrow, the sources said.

“To the best of my knowledge, euro zone member states won’t
need to come back to their parliaments thereafter. Disbursements
will be decided by the Eurogroup working group,” the second euro
zone source said.

Sources said that euro zone finance ministers wanted the SPV
to aim for a AAA credit rating, but there was an understanding
that the rating could be less. Ratings are issued by independent
ratings agencies.

“The Eurogroup has stated that AAA is what the SPV should be
aiming at,” a third senior euro zone source said.

But, having the backing of all euro zone members, the SPV
would always be able to borrow more cheaply than the country cut
off from market financing.

The European Investment Bank, the EU’s long-term lending
arm, has said it could eventually provide back-office type
administrative services to the SPV.

It already provides such services to a number of trust funds
set up by the European Commission and member states.

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(Reporting by Jan Strupczewski and Julien Toyer, Editing by
Toby Chopra)

UPDATE 2-Details agreed for euro zone loan vehicle – sources