The European Union (EU) unveiled a €750 billion($952 billion) bailout package yesterday to help stabilize the euro against the U.S. dollar.
The European Central Bank and other national banks structured the European stabilization program and also launched a program to buy up debt of the most vulnerable euro zone countries. The rescue scheme will also be backed up to €250 billion by the International Monetary Fund.
The initiative led to the immediate revival of Greek government bonds. According to market reports, the yield on Greece's ten-year bond fell to 6.7% from 12%.
"The program addressed the crisis of confidence, (this time pertaining to European peripheral sovereigns and potentially beyond), leading all risk-asset markets to stage a recovery from the pummeling of last week," Deutsche Bank analysts said in their weekly securitization report. "Indeed in the absence of such efforts it is likely that today’s report would have on the one hand centered around speculation on timing, size, and form of any bail-out, versus on the other drawing parallels with the extent of post-Lehman like European ABS spread widening if it was delayed further or did not occur."