Posts tagged 'PSI'

The Tortus sell is Portugal

Those rascal short sellers are at it again, daring to ask awkward questions of the European project. This time the manifesto comes from New York based Tortus, who have a plan to “rehabilitate” Portugal. (H/T @Pawelmorski and @IyerC).

Before rehabilitation, however, there must come acceptance, and Tortus is short “certain Portugese sovereign bonds” because it does not think the status quo is sustainable. Read more

Germany won’t stand in Cyprus’ way, apparently

Cyprus, the small economy with the relatively massive bank recapitalisation problem, may have some kind of good news in its quest for a bailout: Germany might not be so wedded to blocking or delaying said bailout after all.

Schauble Cyprus screenshot - SZ  Read more

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

Don’t call it a boondoggle

Greece paid up to 40 cents in the euro for one of the bond in its buyback. Average price: 33.8 cents in the euro.

Or rather wants to pay. It has “advised… official creditors” that it wants another €1.29bn in EFSF notes to purchase all of the bonds tendered, up from the original €10bn.

The results, in table form via this release (click to enlarge): Read more

An (extended) offer from Greece…

Click for details. The Greek PSI bond buyback now closes at 12pm London time on December 11.

Now, is this supposed to be a veiled threat if investors choose not to tend their bonds? From the Greek debt office chief, Stelios Papadopoulos: Read more

The return of the Greek buyback (boondoggle)

We’re feeling very nostalgic. From the WSJ:

Euro-zone countries are considering a proposal that would see Greece cut its debt by buying back bonds held by private creditors at a discount.

The exercise–one of a number of options being studied–could persuade the International Monetary Fund to sign off on a loan payment desperately needed by the debt-laden country and keep Greece’s bailout on track for the medium term, two officials with direct knowledge of the discussions said Thursday.

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The Greek PSI bond, charted

Clearly, the sense that Greece has stepped away from the brink of getting kicked out of the eurozone is the key driver, coupled with expectations that Brussels will give Athens a loan repayment extension.

Recent comments by eurozone officials quoted by Reuters that Athens could use funds from privatisations of state-owned assets to retire debt also don’t hurt:
“The privatisation process is finally kicking in, the structure is ready,” the official said. “You could expect a few billion euros from privatisation to buy back debt. This could happen relatively quickly.”

The debt swap plan seems to be working, then, but we wonder for how much longer… Read more

Accorinti and others v ECB

Big props to Bloomberg for putting this little-known case on the radar (don’t worry, we’ll explain):

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PSI lost

Hard to believe it was six months ago.

If you think the fat lady hasn’t yet belted it out on the possibility of future sovereign debt restructuring in the eurozone… (and who’d rule it out, ECB actions notwithstanding) Read more

Top of the OSI to you [updated]

Via RTÉ News earlier, hat-tip Lorcan…

In an effort to secure a return of Ireland to the markets, sources say the Troika is considering adjusting the terms of the country’s repayments. Instead of paying back EU loans over an average of 15 years it is considering extending them to 30 years.

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Finally, a truly Popular bailout!

Cyprus is apparently preparing a bailout for its second biggest bank which could come in at near 10 per cent of GDP.

This is from the Cypriot press (poorly Google-translated – sorry – and now apparently removed and replaced by a much blander article; although Reuters looks like it saw the same thing so we are not going mad): Read more

Normalising subordination, in Portugal

Something you will never ever read in an IMF report on Greece…

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Principle write-downs in PSI

Yes, the headline’s a pun. A very bad one.

The following aren’t particularly new criticisms of the legacy set by Greece’s debt restructuring (least not on FT Alphaville)… Read more

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, the report’s worth reading. Read more

Greek PSI — the implications

While everyone is wondering about whether Isda will call a credit event on Greece or not, JP Morgan’s economic research team on Friday cuts straight to the point.

Credit event or no credit event, what we should really be talking about is debt sustainability. And on this front the PSI deal, they believe, does not create immediate hurdles. Yay! Read more

Greek PSI — the analyst reaction

An initial roundup of the PSI commentary out this Friday morning.

First off Standard Chartered’s Sarah Hewin, who thinks Isda might call a credit event: Read more

Greece CDS: trigger sad

Shhhh! Be very, very quiet. The Isda Determinations Committee has been meeting to decide whether there’s been a restructuring Credit Event that would trigger payouts on CDS referencing Greece and we don’t want to spook them.

Or as the WSJ put itRead more

Greece CDS: trigger happy

Jeez, guys, look, there’s going to be a credit event that triggers Greece CDS, ok? Or, at least, it seems highly likely. So, take a chill pill.

What, you don’t want to? Instead you want to submit another request to the Isda Determinations Committee to try to trigger the contracts? Fine, have it your way (click to expand): Read more

ECB (temporarily) suspends Greek collateral

We assume this is just while the PSI is underway and follows S&P’s selective default move overnight. From the ECB on Tuesday….

The Governing Council of the European Central Bank (ECB) has decided to temporarily suspend the eligibility of marketable debt instruments issued or fully guaranteed by the Hellenic Republic for use as collateral in Eurosystem monetary policy operations. This decision takes into account the rating of the Hellenic Republic as a result of the launch of the private sector involvement offer. Read more

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.

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That Greek debt sustainability analysis in full

Here it is via a reader (not that one), also in various places on the interwebs.

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Eurogroup maths

So the deal is in, and it combines bigger private sector “voluntary” haircuts (53.5 per cent of face value, as opposed to 50 per cent agreed in October) with the ECB passing the profits from its Greek bondholdings onto the national central banks, who will then pass it onto Greece. Together these measures are expected to enable Greece to reach a debt/GDP ratio of 120.5 per cent by 2020.  There is also mention of enhanced — and permanent — monitoring.

Some highlights below; full PDF hereRead more

‘Deal is done’

Reuters quotes two sources saying a deal is done with a nominal PSI haircut of 53.5 per cent, or more than the 70 per cent net present value previously discussed:

Another official confirmed that the financing would total 130 billion euros with the aim of reducing Greece’s debts from around 160 percent of GDP now to 121 percent by 2020, but cautioned that drafting of the deal was only just starting. Read more

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, provided the debt-restructuring talks have a successful outcome… Read more


Grexit being, of course, a Greek exit from the eurozone. (Also, an app for archiving and sharing Gmail threads. Bummer for them.)

The term comes from Willem Buiter and Ebrahim Rahbari at Citi, who are now leaning towards the “let them leave” argument: Read more

There are official creditors, and there are “official” creditors

The unstoppable force…

“If the level of Greece’s privately held debt is not sufficiently renegotiated, then public creditors, holders of Greek debt, will also have to participate in the financial effort,” Lagarde told journalists in Paris.

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Greek bondholders draw line in the sand on haircuts

Eurozone finance ministers will on Monday decide what terms they will accept on a Greek debt restructuring after talks going into the weekend failed to reach agreement, reports Reuters. The mood in Athens was tense on Sunday night, says the FT, after it became clear that an outline agreement on cutting Greece’s debt by €100bn could not be reached ahead of Monday’s meeting of the finance ministers in Brussels. Private owners of Greek debt have made their “maximum” offer for the losses they are willing to accept, the bondholders’ lead negotiator has said, implying that any further demands could kill off a “voluntary” deal and trigger a default. Charles Dallara, managing director of the Institute of International Finance, said he remained “hopeful and quite confident” the two sides could reach a deal that would prevent a full-scale Greek default when a €14.4bn bond comes due on March 20. The NY Times says Germany and the IMF have continued to insist that the longer-term bonds that would replace the current securities must carry yields in the low 3 per cent range, citing unnamed officials involved in the negotiations on Sunday, but Mr Dallara told Greece’s Antenna network that 3.8 to 4 per cent was the best deal that could be done in a voluntary haircut arrangement. Meanwhile, there was speculation about the circumstances surrounding Mr Dallara’s departure from Athens early on Saturday, says Greece’s Ekathimerini newspaper. The IIF said that Mr  Dallara’s departure had been planned and insisted that there had been no breakdown in talks on the debt swap, dubbed PSI for private sector involvement. But the newspaper says Antenna quoted sources as saying that the IIF chief had met with officials of the French and German finance ministries at the Paris Club on Saturday night for a “secret dinner” where the Greek debt swap issue was allegedly discussed.

Greek lessons for Portugal

It appears that the “voluntary” Greek bond swap might finally come to an end.

Time then to spare a thought for the derivative that drove the need to draft the damn thing so gently in the first place. Ladies and gentlemen, FT Alphaville gives you the incredible shrinking market for credit default swap contracts written on Greece! Read more

Greek bond talks edge closer to deal

The Greek government on Wednesday appeared to move closer to a deal with private bondholders that would avert a threatened default by Athens. Talks with holders of close to €200bn of Greek debt broke down last week, after some eurozone officials called for a sharply lower coupon, or interest payment, on new bonds, the FT reports. The latest proposal called for a coupon starting at about 3 per cent and rising to 4.5 per cent as the bond approached maturity, one banker said. The deal would amount to a 68 per cent loss for bondholders in net present value terms, according to people familiar with the talks. Greece wants to wrap up at least the outline of a deal on the bond swap ahead of a meeting of eurozone finance ministers on January 23. If the swap doesn’t go through, Greece may not be able to make a €14.5bn debt repayment on March 20, or may have to rush through legislation to force recalcitrant bondholders to accept its current proposals – a move that would trigger credit default swaps written on Greek debt, according to experts. Reuters reports that Greek officials have been using the threat of such legislation to pressure hedge funds, and other parties, into participating in the swap.

Banks say time running out fast for Greek deal

Greece’s international creditors are considering an appeal to the French and German leaders to break a deadlock in negotiations over the size of the losses to be taken by banks and other bondholders as part of a €100bn deal seen as crucial to bringing the country’s debt under control, says the FT. This follows a breakdown in talks between banks and official investors on Friday. Citing people close to the negotiations, the newspaper said much of the agreement had been in place for several weeks, but that a final deal had stalled over the coupon payment for new 30-year bonds to be issued by the Greek state. Greek debt managers had agreed with bondholders on a coupon just below 5 per cent but creditors last week proposed a much lower interest rate. Germany has proposed a 2-3 per cent coupon that would increase bondholders’ losses from 60 per cent to more than 80 per cent in net present value terms. Charles Dallara, the IIF’s managing director, told the FT on Sunday that he believed an agreement in principle needed to be completed by the end of this week if the restructuring deal was to be finalised in time for a €14.4bn Greek bond redemption due on March 20.  “[Ms Merkel and Mr Sarkozy] and all the European heads of state said they wanted a deal with a 50 per cent [haircut] and a voluntary agreement,” Mr Dallara said. “Some of their own collaborators are not following that decision.” Greece’s finance minister, Evangelos Venizelos, says talks with the IIF will recommence on Wednesday, reports the WSJ.