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’Now you see the headline fiscal deficit, now you don’t
So, in case you missed it, the IMF released an excellent, pithy staff note on ‘Accounting Devices and Fiscal Illusions’ this week – all about book-cooking of sovereign debt stats.
It touches on almost any accounting trick you can think of,
If you thought Greek bondholders were subordinated…
Subordination of private bondholders by the official sector is already very acute. This means that the more a PSI exercise is delayed, the higher the haircut on the notional needs to be for a given level of debt relief.
The Fund, arrears, and Greek holdouts
So it turns out that we won’t know, for a little while longer, who the holdouts are in Greece’s foreign law bonds – a remaining pimple on the bottom of its debt workout.
Greece has pushed back the deadline for foreign law bondholders to agree to a debt restructuring to April 4,
The Greek bond ‘holdout’ that got away: a footnote
Noting for the record… (H/T Lorcan Roche Kelly of Trend Macrolytics)
Some €4.27bn of bonds held under the ECB’s Securities Markets Programme matured last week. That’s the largest sum maturing in a week since the bond-buying began.
O tempora! O mores! O Irish promissory notes fix
Pacta sunt servanda
- Olli Rehn, noted scholar of Latin (‘pacts are binding’)
If you’re just tuning into the great Anglo Irish promissory notes dispute between the European Central Bank and the Irish government …
The Osborne bond, the official request
From the UK Debt Management Office’s issuance plans for the 2012-13 fiscal year, released as part of the UK Budget documents…
In light of evidence of strong demand for gilts of long maturities and against the backdrop of historically low long-term interest rates,
It’s Mostly Fiscal (Transfer)
Our Brussels Blog colleague Peter Spiegel has penned a great piece on the latest IMF report into Greece, covering the Hellenic Republic’s ‘Request’ for the second bailout.
Even at more than 200 pages,
A proper debt restructuring
It was never going to be the world’s largest sovereign debt write-down. That was Greece last week. Anyway, how could it. The Federation of Saint Kitts and Nevis is the smallest country in the Western Hemisphere.
No forever debt please, we’re British
We couldn’t not post the thoughts of Julian Wiseman, Societe Generale rate strategist, concerning HM Treasury’s trial balloon of a possible 100-year UK government bond.
Wiseman did after all think of it first.
A century of gilt
Or, taking consols, the War Loan, and all that UK sovereign debt jazz into the 21st century.
The latest from the Chancellor of the Exchequer ahead of the UK’s March 21 Budget, according to Wednesday’s FT (and leaving SocGen’s Julian Wiseman prescient):
Greece *upgrade*
Fitch had already given notice they would raise Greece’s credit rating from restricted default — it’s a technical thing related to the ‘cure’ of Greece’s default by completion of its bond swap.
And so the new Greek bonds are now rated B-…
Now witness the firepower of this fully armed and operational collective action clause, etc
Latest from the Greek finance ministry (its debt manager has met German banks):
The Republic confirmed that if it receives sufficient consents to the proposed amendments of the Greek law governed bonds identified in the invitations for the amendments to become effective,
Finland’s got a secret
A reader passes on this curious detail from a Finnish MPs’ debate on Greece (via Helsingin Sanomat):
Some MPs expressed shock that the Ministry of Finance decided to keep the collateral agreement reached between Finland and Greece a secret.
Did Portugal not get the memo?
Just a curio, given that all other sovereign eurozone debt was tightening on Wednesday. Here’s Portugal’s 5 year paper (the ECB has bought, subordinated — what have you — in the market on Wednesday, Reuters said):
That Portugal enigma, demystified
Citi analysts have attempted to explain the Portugal enigma, which they note now has the country’s 10-year bonds trading at some 1,000 basis points above Bunds.
The reason, Jurgen Michels and team say,
A special invitation from the Hellenic Republic…
Here’s the key Greek document — the invitation to participate in the PSI bond exchange. Click to read.
Here also is the trust deed covering the new bonds and GDP-linkers.
The worlds inside a Greek GDP warrant
Let’s start by saying you’re a bondholder mulling Greece’s PSI offer this weekend. (Or you’re Maynard, after a hellish week, reflecting on the offer that you helped to create.)
Remind yourself…
a) You’ve read on the front page of the FT that eurozone creditors are turning Greece (still an OECD state!) into an economic protectorate.
Greek PSI — the offer
Click image for the full release doc — we’re still waiting for the technical memo stuff:
PSI, the Greek details [updated]
Some of them, at least. From the Greek finance ministry, and our own thoughts follow the excerpt:
Co-Financing Agreement
Holders of the New Bonds will be entitled to the benefit of, and will be bound by,
Dash for trash, Hellenic edition
Amid the bailout suspense, the Athens stock index chugs higher…
Though Societe Generale’s equity quant analysts took a pop at it on Monday:
If the definition of a bull market is a gain of 20%
ECB seniority and dirty hands
First, do read Dan Davies’ bailout options post if you haven’t already. It’s like a Greek Kobayashi Maru. Except you have no hope of ending up like James T Kirk. We got to number 5.
But speaking of Greek debt situations where there are no good outcomes left…
Bailout 1.3 (maybe)
It seems instructive to filter the direct quotes uttered by the various ‘officials briefed on preparations’ in this Reuters story on the promised second Greek bailout being delayed….
“There are proposals to delay the Greek package or to split it,
Greek bond accounting, encore encore encore
The real headline news in BNP Paribas’ end-2011 results is two figures, really. US dollar asset funding down by 30.5 per cent since June 2011, holdings of eurozone sovereign debt down by 23 per cent over the same period.
Bailouts and obsolescing bargains
The central administration lacks the management, oversight and co-ordination structures to support effective implementation and long-term management of policy measures, including structural reforms to support sustained economic growth.
Dystopia — safe assets edition
A familiar theme in this year’s Barclays Equity Gilt Study (57th edition, just out)…
(Click charts to enlarge)
But there is a twist — Barclays Capital tried to estimate the percentage of “safe”
Greece’s biggest holdout, dealt with? [updated]
Goodbye to one massive FT Alphaville bugbear, anyway? An interesting story from Stephen Fidler of the WSJ/DJ FX Trader:
The ECB has agreed to exchange the government bonds it purchased in the secondary market last year at a price below face value,