Greek PSI
The Greek PSI is once again (still) hitting the headlines. Here is what I think the most likely scenario is (80% likelihood). Some form of an agreement will be announced. The IIF will announce that the “creditor committee has agreed in principle to a plan.” That plan will need to be “formalized” and final agreement ...
(BN) National Bank of Greece Offers to Buy Back $2.5 Billion Debt
My head must still hurt from New Year’s Eve, but if I understand this, NBG issued preferreds to the Greek government (who just happened to have some money lying around). That raised their capital. Now they are going to buy back some debt with that money. The discount will count as “earnings” thus also increasing ...
Greece – No PSI
As expected banks couldn’t agree to a haircut. Now Greece, the EU, the IMF, and taxpayers, will pay out about about $11 billion of principal and interest before the end of the year. I don’t know who holds the bonds maturing this year, but some of that money is probably finding its way into banks ...
Sovereign CDS – Hellenic Republic CDS
Reports came out on Friday that Greece was now negotiating directly with creditors regarding some form of restructuring. We believe that this increases the risk of a Credit Event occurring, but ultimately it will still have to be a Failure to Pay Credit Event because any agreement with the bondholders would still be considered “voluntary” ...
(BFW) Greece Wants 25% NPV of New Bonds, Banks Want High 40s
The good news is that the head of the IIF probably had his 15 minutes of fame and it can go back to being a cushy lobbying group rather than pretending it has real influence over the banks. The bad news is generally bad though. This goes back to being a very piecemeal and bank ...
You Can’t Spell Tooth Faeries Without EFSF
Well, actually you really can’t, but I guess that is my point. We have been reacting so much to headlines there has been no focus on details. Even the political farce in Greece drew attention away from the real problems. If anyone had told me that by the end of the G-20 meeting all we ...
Any Greek Restructuring Should Be Designed To Trigger A Credit Event
As talk about an actual restructuring of Greek debt increases, the EU continues to think that avoiding a CDS Credit Event is a good thing. More and more stories and leaks indicate that a real restructuring of Greek debt is on the table, with write-offs of as much as 50%. Whether it will be real, ...
The Evolution of EFSF
It seems so long ago, but it was just over a year ago the EFSF was first created. The first iteration was set up in a way that although the headline number seemed relatively large, the amount that would ever be lent was under 300 billion euros as there were various holdbacks and other mechanisms ...
Italy Votes, IMF Gives, and EFSF Yields Increase
Italy rejected the budget today. I can’t imagine that it is because the opposition wanted more austerity. That must make the Slovakians even more eager to provide the EFSF with money to buy Italian bonds. The IMF has declared that they went to Greece (because they had purchased non-refundable tickets) but are going to give ...
Reaching For Yield And Clubbing Baby Seals
With Greece “solved” and economic data topping expectations, we are back in full risk on mode. Once again the quest for yield is on every fixed income investor’s mind. “Reaching for yield” is a term used when investors make an investment based on wanting more current income. It may be a subtle difference, but the ...