http://www.zerohedge.com/news/greece-issues-statement-psi-says-%E2%82%AC172-billion-bonds-tendered-swap-will-enact-cacs
Submitted by Tyler Durden on 03/09/2012 01:04 -0500
It's safe to stop right there. No one in their right mind can possibly believe EU leaders or the ECB. Certainly the markets do not believe in such fairy tales.Portugal is interesting in that neither LTRO had much effect. For example, 10-Year Portuguese government bonds yield 13.86%. 2-year bonds yield 12.54%. Meanwhile German 10-year bonds yield 1.8% and German 2-year government bonds yield .16%.
Portugal cannot possibly survive on those spreads. Thus, what has to happen, will happen. Major haircuts are coming.
Pritchard notes fundamental reasons why.
Portugal is poised to blow up anytime now. Greece is already pricing in further writedowns. Expect Ireland and Spain to ask for writedowns.
Eventually voters in Germany, the Netherlands, Finland, or possibly even France will get fed up with these repeated bailouts at taxpayer expense and demand action. So will voters in Spain, Greece, Portugal, and Ireland, all bleeding profusely from "help".
It is quite amusing to watch these bald-faced liars at the ECB, EMU, and IMF, pretend everything is OK just as the sovereign debt default tsunami is inches from shore.
Greece Issues Statement On PSI, Says €172 Billion Of Bonds Tendered In Swap, Will Enact CACs, ISDA To Meet At 1pm To Find If CDS Trigger
The biggest sovereign debt restructuring in history is now, well, history. The headlines are finally come in:
- GREECE ISSUES STATEMENT ON DEBT SWAP
- GREECE COMPLETES DEBT SWAP
- GREECE SAYS EU172 BLN OF BONDS TENDERED IN SWAP
- GREECE GETS TENDERS, CONSENTS FROM HOLDERS OF 85.8%
- GREECE SAYS 69% OF NON-GREEK LAW BONDHOLDERS PARTICIPATED
We learn that €152 of the €177 billion in Greek law bonds have tendered, which is 85.8%. This means that €25 billion in Greek law bonds have not - these are the hedge funds that could not be Steven Rattnered into participating, and will now sue Greece for par recoveries.This is also the number that ISDA will look at today to determine if, in conjunction with the CAC, means a credit event has occurred.
And yes, the CACs are coming, as is the Credit Event finding:
- GREECE SAYS WILL AMEND TERMS OF GREEK LAW BONDS FOR ALL HOLDERS
As a reminder from February 24:
Finally, as we have said all along, it is the UK-law bonds that are the fulcrum security here:
- GREECE TO EXTEND NON-GREEK LAW BOND OFFER PERIOD TO MARCH 23
And here is Veni:
and.....«On behalf of the Republic, I wish to express my appreciation to all of our creditors who have supported our ambitious program of reform and adjustment and who have shared the sacrifices of the Greek people in this historic endeavour. With the support of our official sector and private creditors, Greece will continue implementing the measures needed to achieve the fiscal adjustments and structural reforms to which it has committed, and that will return Greece to a path of sustainable growth. Our invitations to offer to exchange, and submit consents with respect to, foreign law governed will remain open until 23 March 2012, after which there will be no further opportunity for creditors holding those instruments to benefit from the package of EFSF notes, co-financing and GDP linked securities which form an important and integral part of our invitations.»
Prepare for Major Haircuts on Portuguese Debt
Ambrose Evans-Pritchard at The Telegraph says Legal skull-duggery in Greece may doom Portugal.
I suggest that Portugal is doomed whether or not there is "Legal Skull-Duggery". However, it's perfectly fair to suggest that LSD will indeed make matters worse.
From Pritchard ...
I suggest that Portugal is doomed whether or not there is "Legal Skull-Duggery". However, it's perfectly fair to suggest that LSD will indeed make matters worse.
From Pritchard ...
Last month the European Central Bank exercised its droit du seigneur, exempting itself from loses on Greek bonds. The instant effect was to concentrate more loss on other bondholders. "This has set a major precedent," said Marchel Alexandrivich from Jefferies Fixed Income. "It does not matter how often the EU authorities repeat that Greece is a 'one-off' case, nobody in the markets believes them."
The ECB holds €220bn (£185bn) of Greek, Portuguese, Irish, Spanish, and Italian bonds. Its handling of Greece implicitly subordinates private creditors in each country. All have slipped a notch down the pecking order.ECB Lies
This might not matter too much if Greece were really a "one-off" case but markets are afraid that Portugal will tip into the same downward spiral as austerity starts to bite.
Citigroup expects the economy to contract by 5.7pc this year, warning that bondholders may face a 50pc haircut by the end of the year. Portugal's €78bn loan package from the EU-IMF Troika is already large enough to crowd out private creditors, reducing them to ever more junior status.
EU leaders said last June that "Greece is unique" and promises that haircuts would "not be replicated in Portugal". They have since pledged that the EU's new bail-out (ESM) fund will not have protected status.
It's safe to stop right there. No one in their right mind can possibly believe EU leaders or the ECB. Certainly the markets do not believe in such fairy tales.Portugal is interesting in that neither LTRO had much effect. For example, 10-Year Portuguese government bonds yield 13.86%. 2-year bonds yield 12.54%. Meanwhile German 10-year bonds yield 1.8% and German 2-year government bonds yield .16%.
Portugal cannot possibly survive on those spreads. Thus, what has to happen, will happen. Major haircuts are coming.
Pritchard notes fundamental reasons why.
Combined public and private debt is 360pc of GDP, 100 percentage points above Greece. This is a huge burden on a shrinking economic base. Its current account deficit was still 8pc of GDP last year, much like Greece. Both countries are overvalued by 20pc on a real effective exchange rate, though Portugal has barely begun to cut unit labour costs.
Dimitris Drakopoulos from Nomura said Portugal relied on "fiscal engineering" last year to massage deficit figures, raiding 3.5pc of GDP from private pension funds.
Matters will come to a head soon. The IMF must decide by September whether Portugal needs more money and debt relief. If Portugal now spirals into a Grecian vortex, large haircuts loom. This time EU leaders will have to accept that their own taxpayers will suffer losses - avoided until now - or violate their pledge.
Europe's handling of Greece has guaranteed that global funds will rush for Club Med exits at the first sign of trouble. The next spasm of the debt crisis will that much dangerous if it ever comes. As the saying goes: Hell hath no fury like an abused bondholder.Bleeding Profusely From Help
Portugal is poised to blow up anytime now. Greece is already pricing in further writedowns. Expect Ireland and Spain to ask for writedowns.
Eventually voters in Germany, the Netherlands, Finland, or possibly even France will get fed up with these repeated bailouts at taxpayer expense and demand action. So will voters in Spain, Greece, Portugal, and Ireland, all bleeding profusely from "help".
It is quite amusing to watch these bald-faced liars at the ECB, EMU, and IMF, pretend everything is OK just as the sovereign debt default tsunami is inches from shore.
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