Euro zone agrees emergency loan SPV details - sources

BRUSSELS (Reuters) - Euro zone experts have reached a deal on the technical aspects of the special purpose vehicle (SPV) that could borrow up to 440 billion euros with euro zone guarantees for euro members in trouble, sources said on Friday.

European Union flags are seen outside the European Commission headquarters in Brussels, April 12, 2006. REUTERS/Yves Herman/Files

The agreement will requires the approval of euro zone finance ministers at a meeting in Luxembourg at the start of next week.

“We already have an agreement, but 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 idea of the SPV emerged in May as a way to help euro zone countries to which markets effectively refused to lend like recently in the case of Greece.

But unlike in the case of Greece, it would be the SPV that would borrow on the market against guarantees issued by all 16 members of the single currency area.

In Greece’s case, each of the euro zone countries has to go to the market and raise the money individually to extend bilateral loans to Athens.

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 second senior euro zone source said.

There would be no need for the SPV to ask national parliaments for approval of its actions each time it has 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,” a third euro zone source said.

Reporting by Jan Strupczewski and Julien Toyer, editing by Timothy Heritage