The IMF has picked its week to publish another paper on changing its sovereign debt restructuring policy…
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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?
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
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.
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.
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
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
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:
Abuse of official secrecy. It’s been one of the more corrosive but — by definition — shadier aspects of the eurozone crisis.
It can take the form of a report on money-laundering in Cyprus. Or the opaque process by which Troika debt sustainability analyses are drawn up. Emergency liquidity assistance to banks, even. Read more
A couple of years back, when Carmen Reinhart and Belen Sbrancia updated the concept whereby governments might deal with a problematic mountain of debt by confiscating the savings of their subjects, the discussion was all about the subtle, sleight of hand solutions that might be employed.
Artificially cheap rates of interest might be forced on the embattled sovereign’s debt, local banks might be obliged to buy mis-priced government paper, exchange controls may be erected, and so on. Ordinary people, it seemed, could be financially repressed without realising they were in fact the victims.
There was no discussion back then of outright expropriation or a “tax”, as insured (and uninsured) depositors at Cypriot banks are now being forced to bear. Read more