The unemployment crisis raging in Greece has worsened even further, data just released showed.
The Greek unemployment rate hit 21% in December, up[ from 20.9% in November, the country's statistics office revealed.
The data also showed that Greece's average unemployment rate for 2011 as a whole hit 17.3%, up from 12.5% in 2010.
Photograph: Financial Times Hats off to the Financial Times, who have drawn up a rather nifty 'Greek debt restructuring thermometer' to show the key levels Greece needs to reach in the debt swap.
You can see the full thing (much larger, thus legibly) over here.
After a slow start, European stock markets have burst into life in the last few minutes. The FTSE 100 has jumped 64 points, or 1.1%, to 5855. The French and German markets are both 1.6% higher.
The trigger for this bout of optimism is a report from Greece that the participation rate has now hit 73%.
Peter Bofinger, one of Germany's economic Wise Men, has declared this morning that the Greek debt swap deal will go through, although Greece will need to activate the CAC clauses, forcing creditors to take part in the exchange.
That's the good bit.
Bofinger, who serves on the German Council of Economic Experts, also predicted that further cuts will be needed to Greece's debt pile in six months time.
Here's the key quotes.
What will have to be achieved is a real debt relief for Greece -- and it will have to come in the next 12 months.
Just in -- the Athens government will officially announce the results of the debt swap at 6am GMT tomorrow sharp, or 8am local time.
So set your alarm clocks...
Over in Greece, the government is not officially disclosing the latest take-up dates. But it remains confident that the Private Sector Involvement will be a success.
One official said this that Lucas Papademos's administration were "optimistic".
The pace of responses to the bond offer is good, the percentage of bondholders tendering voluntarily is very high.
The latest estimate this morning is that 60% of Greek bond holders have agreed to swap their debts .. So we're already very close to the crucial 66% level, based on official declarations.
As Bloomberg explains:
and.....Greece's largest banks, most of the country's pension funds, and more than 30 European banks and insurers including BNP Paribas (BNP) SA, Commerzbank AG (CBK) and Assicurazioni Generali SpA (G) have agreed to the offer. That brings the total to about 124 billion euros ($163 billion),A quick reminder of how Greece's debt swap works, and what it needs to achieve:The offer
• Greece's creditors, who hold around €207bn of the country's debt, are being asked to take a 53.5% haircut on the 'nominal value' of their bonds. That equates to an actual loss of around 75%. Under the plan, they would exchange their existing securities for new, 30-year Greek bonds, and some higher-value bonds issued by Europe's bailout fund.The criteria for success
The legal minimum participation rate in the debt swap is 50% -- ie, at least half of eligible bond holders have to take part. That target appears to be 'in the bag', based on the number of banks who have announced they'll take part. Athens had been aiming for a 75% participation rate.The key issue, then, is how many of the participating bond holders agree to swap their bonds.• An acceptance rate 95% or more: This means the bond swap would be classed as voluntary.
• An acceptance rate between 66% and 95%: The bond swap could not be classed as voluntary. Greece could then compel the remaining bond-holders to take a haircut by activating Collective Action Clauses. In that scenario, Greece would be declared in default, and credit default swaps would be triggered.
• An acceptance rate below 66%: The debt swap would fail.City experts believe that the second option is most likely.There is another wringle: Greek bonds issued through London, which make up around 14% of the debt pile, will not be restructured until April.Events in Greece will probably dominate today's news cycle, even though the debt swap deal will only close late tonight. Here's today's agenda.
Outlook positive for bond swap
Gov't officials upbeat, 60 percent of private investors said to be already on board
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Investors with about 60 percent of the Greek bonds eligible for the nation’s debt swap have so far indicated they will participate, putting the country on the verge of the biggest sovereign restructuring in history, Bloomberg reported on Thursday.
Government officials appeared increasingly confident that the exchange would go through.
"The pace of responses to the bond offer is good, the percentage of bondholders tendering voluntarily is very high,» a government official, who spoke on condition of anonymity, told Reuters. «It is going well, we are optimistic,» he said.
A senior Greek finance ministry official told Reuters the government was hopeful that well over 75 percent of eligible bonds would be submitted, easily clearing the original minimum threshold it had set for the deal to proceed.
Some hedge funds and several Greek pension funds were holding out but the high level of acceptances well before the deadline suggested that the deal was progressing smoothly despite initial warnings of a low take-up.The goal of the exchange is to reduce the 206 billion euros of privately held Greek debt by 53.5 percent and turn the tide against the debt crisis that has roiled Europe for more than two years. While Greece would prefer a voluntary deal, the government has said it will use collective action clauses to force holders of Greek-law bonds into the swap if the so-called private sector involvement falls short and it gets sufficient approval from investors to change the bonds’ terms.
The eurozone has asked for participation in the private sector involvement, or PSI, to reach between 95 and 100 percent in order to sign off on the new bailout.
It is expected that Greek authorities will announce the results of the PSI at around 8 a.m. local time on Friday.
Eurozone finance ministers are due to hold a teleconference later on Friday to discuss how to proceed following the closing of the offer to Greek bondholders. If CACs apply to bonds written under Greek law, the swap is due to take place on March 12. For bonds under UK law, the swap would take longer.
1.20pm: Speaking in Belgrade, Italy's Mario Monti has just told reports that more than 60% of bondholders have now signed up for the debt swap, adding:
ReplyDeleteThe solution is very close.
The deadline is certainly close -- under seven hours to go now.
Charles Dallara of the IIF (the body representing Greece's bondholders) also hit the airwaves to announce that he sees a "high level of participation" in the Greek debt swap. Didn't announce any extra creditors, though.
1.08pm: We haven't actually seen any new bond-holder announce that they will back the Greek debt swap today. So that leaves the total declared as follows:
Private creditors: €84bn (data issued by the Institute for International Finance, which represents them):
Greek pension funds: €25bn (based on public declarations)
Greek banks: €14bn (based on recent industry data)
With €206bn of Greek debt in private hands, that comes to just below 60% (which is Bloomberg's figure from this morning).
fwiw..
ReplyDelete12.54pm: Wall Street is expected to open higher this afternoon, with traders pencilling in a 100-point jump for the Dow Jones index.
With the FTSE 100 index up 74 points, or 1.3%, there is still a general belief that Greece will complete the debt swap deal. As Josh Raymond of City Index commented:
Market speculation exists that there is a current 70%+ participation rate and this number is likely to increase throughout the day.