(Updates with bond yields in sixth paragraph.)
Feb. 13 (Bloomberg) -- Finland may sign a deal on securing collateral in exchange for its commitment to Greece’s second bailout in the “next few days,” Finance Minister Jutta Urpilainen said.
A vote in parliament on Finland’s participation in the bailout could follow next week, she told reporters in Helsinki today. Euro-area finance ministers share a “very strong” common stance in their view on what Greece must do, namely act on its pledges of austerity before more aid can be released, she said.
Finland, one of four AAA rated euro members, last year became the only nation in the currency bloc to secure extra assurances that its commitments to a second Greek rescue be repaid by insisting on collateral. In return, Finland agreed to pay its contribution to the permanent rescue facility, the so- called European Stability Mechanism, up front.
“I hope we could sign the collateral agreement in the next few days,” Urpilainen said. “These conditions must be fulfilled before Finland’s parliament can give a green light” to a second Greek bailout.
Prime Minister Jyrki Katainen’s cabinet is backed by a majority in parliament and the government’s 124 lawmakers must vote to uphold the coalition or face penalties. Lawmakers who fail to comply may be ejected from their party’s parliamentary group, the main forum for their work in the legislature.
Finland’s 10-year bond yield fell 4 basis points to 2.358 percent in intraday trading, paring its gain to 2.1 basis points since close on Feb. 10. The spread to similar-maturity German bunds widened by 0.8 basis points to 43.8 basis points today.
While Finland requires collateral for all rescue loans paid from the temporary rescue fund, the European Financial Stability Facility, Urpilainen said Dec. 21 the country will forgo extra security for any lending from the ESM.
Asked when the government will be able to bring the Greek bailout before Finland’s parliament, Urpilainen said it depends on euro area finance ministers.
“We must assess whether these criteria we have set have been fulfilled,” said Urpilainen, who heads the Social Democratic Party, the coalition’s second-biggest group. “If they are fulfilled, the eurogroup will allow the process to move forward and for Finland that means probably already next week we could bring it to parliament.”
Asked about the need for a second rescue package for Portugal, Urpilainen didn’t rule out the possibility of more aid.
“No one can know what the future will bring,” she said. “The biggest concern now is over Greece. We must find a sustainable solution that genuinely allows it to pull through.”
--Editors: Tasneem Brogger, Christian Wienberg
To contact the reporter on this story: Kati Pohjanpalo in Helsinki at firstname.lastname@example.org
To contact the editor responsible for this story: Tasneem Brogger at email@example.com