A brief collection of reaction to Sunday’s election in Greece follows. Before we hear from the professional financial crowd, however, a word from Eric LeCompte, executive director of Jubilee USA…
This election was a referendum on austerity and debt policies. The people of Greece voted and said no to austerity and yes to renegotiating Greece’s debt.
Austerity programs can be likened to trying to help a patient on life support by punching them.
Speaking at Davos this morning, Angela Merkel and Alexander Stubb argued that European creditors should not be held responsible for their poor lending decisions.
Well, that’s not exactly how they phrased it: Read more
Eric Dor of the IESEG School of Management in Lille has a handy table. Click to enlarge…
A snap presidential election — and the chances of Syriza coming into power if the government fails to win enough support to push its candidate through — are all it took to push the ASE down over 10 per cent on Tuesday.
Which makes it a 27 per cent drop for the Athens bourse this year. Only the Portuguese, Nigerian, Russian (in US dollars), and Ukrainian stock markets have done worse in 2014. Read more
The IMF has picked its week to publish another paper on changing its sovereign debt restructuring policy…
Although the paper released on Friday — which follows an initial review last year — isn’t about Argentina, pari passu, and holdout issues. It’s about Greece. Read more
From the Bank of Greece’s Chronicle of the Great Crisis (h/t Faisal Islam), or at least the English extract released so far, here’s confirmation of the euros that were flown into Greece during 2010/ 11. Just the €5.3bn:
We can imagine that’s something of a trigger word for Greek bondholders with long memories. Read more
Here’s where another €2bn or so of freshly-issued Greek bonds would go. Chart via Citi:
And that’s after the largest sovereign debt restructuring in history. Bracing isn’t it?
And yet maybe Greece is better off paying up to issue a bond to private bondholders on Thursday. In the long run, it could well beat taking ‘free’ money from the Troika.
Coupon not fixed yet. But note a) that they’ve hired lots of banks to sell this and b) the law… Read more
This year’s IMF-World Bank Spring Meeting is likely to include discussion of proposals to change the fund’s policy on sovereign debt restructuring. Gabriel Sterne, senior economist at Exotix with IMF experience, and Charles Blitzer, Principal at Blitzer Consulting and a former IMF staff member, argue in favour of a case-by-case approach.
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One-year total return of the Athens stock index, to the end of October 2013: +50%
One-year return of the Bloomberg Greece Sovereign Bond Index, same period: +134%
One-year net return of Dromeus Capital’s Greek Advantage Fund: +107%
Yep — FT Alphaville hears that the first-year performance of Dromeus Capital’s Greece-focused fund would make it one of 2013′s best-performing, having already made a strong start at the beginning of the year.
It’s another indicator of how much both Greek equities, and the sovereign’s restructured debt, have recovered this year… Read more
Months after the Finnish government was made to open up its Greek bailout ‘collateral’ deal to public scrutiny, one of the weirder episodes of official secrecy in the eurozone crisis …
Finland’s Chancellor of Justice, Jaakko Jonkka, has criticised the decision to keep the Greek transaction under wraps in the first place: Read more
FT Alphaville began writing in detail about emergency liquidity assistance in the eurozone — that is, national central banks lending to stricken, but supposedly solvent banks on highly secretive terms, against collateral not accepted at the ECB — some two and a half years ago.
Throughout that period, the ECB’s precise oversight of this liquidity assistance remained in the dark. Despite the risk being taken by taxpayers, and despite the fact ELA effectively stopped the Greek, Irish and Cypriot banking systems from going under at various points. And despite procedures having been in place since 1999 for the ECB to restrict ELA by a national central bank if it endangers the rules of the euro (as used in Cyprus). Read more
Sign of the times perhaps, though in any case easy to overlook (as we did)…
That’s a box on “one-off capital levies” — or wealth taxes — burrowed away on page 49 of the IMF’s latest Fiscal Monitor. Click to enlarge. Hat-tip to Societe Generale’s rates strategists.
Just in case you thought the Cypriot precedent had been forgotten. Read more
Is this hundreds of basis points safer than the Greek government?
You might well ask. Read more
Did you forget that Japonica’s offer to buy up a huge chunk of the Greek bond market still exists?
It might be easy to. They’ve just extended the deadline again by another month.
For holders tendering at a 15 percent to 20 percent large block illiquidity discount to observed bid-ask midpoint prices, the Acquirer reserved the right to reimburse up to 50 percent of the cost of independent fairness opinions. These fairness opinions specify the range of the double discount in the current market and are an industry best practice. The double discount includes the discounts for large blocks of fixed income securities and for highly illiquid fixed income securities.
FT Alphaville had expected to report the triumphant acquisition of almost 10 per cent of the Greek bond market by a single, little-known investor on Monday. As per the original July 1 deadline on Japonica Partners’ unusual offer to bondholders.
A pleasure denied: Read more
So, a plurality of the Finnish public may just agree with FT Alphaville.
Click to enlarge. That’s a Gallup poll by Helsingin Sanomat on the Finnish government’s Greek ‘collateral’. Read more
And so FT Alphaville comes across “TENDER OFFER MEMORANDUM — INVITATION FOR TENDER IN RESPECT OF BONDS OF THE HELLENIC REPUBLIC”: the official launch of Japonica Partners’ eye-catching attempt to buy up to 10 per cent of Greece’s restructured bonds, in a kind of Dutch auction.
And there’s one very important point here. Read more
The International Monetary Fund’s “ex post evaluation” of its involvement in the Greek bailout continues to generate debate over the weaknesses revealed. Gabriel Sterne, a senior economist at Exotix with two decades of public sector experience including at the IMF, argues that the issues for the fund go much deeper.
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Click for the IMF’s “ex post evaluation” of its role in the Greek bailout. Its mea culpa.
And if you thought we were being harsh here, parts of the real thing are excoriating.
This is even though the report decides Greece’s exceptional access to IMF lending was justified (generally), and it still says much fiscal adjustment could not be avoided. Policies were “broadly correct”. But it does strongly suggest that debt restructuring should have come sooner.
So, the International Monetary Fund (effectively) wishes to apologise to all concerned for that little thing where it turned into Dominique Strauss-Kahn’s presidential election campaign a few years back.
Sorry if a country got broken along the way: Read more
Just when we thought we’d dreamed Monday’s news of this.
The mysterious folks at Japonica Partners have come out with their full “tender offer” to buy up almost 10 per cent (€2.9bn) of Greece’s restructured bonds: Read more
Well, the apparent uselessness of Finland’s Greek ‘collateral’ is all very embarrassing, and it’s also terribly public by this point. But surely there can’t be that much backlash over this rather arcane derivatives transaction.
Ah, hold on. Read more
We are not quite sure what is going on here.
Japonica Partners, a self-styled “entrepreneurial co-investment firm” based in Providence, Rhode Island, has launched a tender offer for almost 10 per cent of all Greek government bonds in circulation.
It’s ready to buy paper worth €2.9bn at par, paying a minimum of 45 per cent of face value. Read more
Somehow — was it the ludicrous secrecy, maybe? — you could tell this was coming.
On Wednesday, Jan Hurri at Taloussanomat took advantage of the Finnish government’s recent doc dump in order to reach a conclusion about its deal for ‘collateral’ on Greek bailout loans: Read more
Over 20 of them, actually.
Jan Hurri, a journalist for Taloussanomat, noticed that a number of documents were missing from the Finnish government’s recent, court-ordered disclosure about the ‘collateral’ for its Greek bailout loans… Read more
An upgrade in this environment is apparently stupidly effective. Here’s Greece’s 10-year bond yield tumbling a full one per cent the day after Fitch upgraded it to to B- from CCC, and said the outlook was stable: