Posts tagged 'Greece'

Taking the red pill, Greece edition

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.
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That new Greek bond — the terms

Coupon not fixed yet. But note a) that they’ve hired lots of banks to sell this and b) the law… Read more

Guest post: The IMF approach to sovereign debt restructuring

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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Dear Dromeus Capital investor…

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

A Finnish collateral coda

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

Europe’s not so secret liquidity. Not any 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

Wealth-taxing, redux

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

The sovereign ceiling, redux

Is this hundreds of basis points safer than the Greek government?

You might well ask. Read more

Caption contest! When Tsipras met Asmussen edition

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A Greek bond offer hangs around even longer

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.

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A clearer(?) Greek bond raid

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

Finland has a collateral credibility issue

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

A Greek bond raid – will it work?

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

Guest post: Regrets, IMF had a few

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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Ignored Many Flaws — the report

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.

Excerpts follow…

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Ignored Many Flaws

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

A Greek bond raid — more details

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

Finland’s Greek collateral: still pointless

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

A Greek bond raid

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

Finland has a swap… that’s a bit pointless

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

Finland still had a few secrets

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

Upgrade driven rally du matin

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:

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Finland’s got a secret… no longer

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

Cyprus, where the vicious circle stopped

In continental Europe, we are witnessing the rather extreme outcome that results from having the provision of liquidity divorced from an ability to regulate banks…

UBS analysts John Paul Crutchley and Alastair Ryan, 2009 Read more

Meanwhile, in Greece…

Dromeus Capital. The name might ring a bell. It’s the fund which did its homework on underpriced Greek assets last year, making a killing.

Pretty striking, then, that they’ve now gone cautious on Greece. Read more

Beyond financial repression

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

A stupid idea whose time had come

A “one-off” often isn’t. Calling something after “stability” isn’t very stable. Saying that something is not a precedent usually makes it one.

Presenting the Cyprus bailout’s “upfront one-off stability levy” for depositors in Cypriot banks: Read more

A statistician speaks out

It’s Andreas Georgiou, the head of Greece’s independent statistics agency, Elstat.

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It’s Mostly Fiscal (Transfer), all over again

We saw this coming from the IMF all the way back in March 2012 — when Greece’s PSI was just over, and vague notions of OSI were already in the air. Read more

Greece’s fragile bond rally

Greece may have an ongoing issue or two, but that didn’t stop its government debt rallying 274 per cent in the second half of last year. Clearly, the driver was the reduced likelihood of it leaving/being kicked out of the eurozone, rather than the (dismal) economics.

Gabriel Sterne at Exotix says the run was one of the “most astounding sovereign bond rallies of all time”, but that the bonds are now over-bought. The declining possibility of a Grexit, he says, is more than fully priced in (his emphasis): Read more