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Greek (Dis)Information Update: No Greek Bond Offering This Week
As we head into a new week, one of the bigger development expected out of Europe will be "imminent" launch of a €5 billion Greek bond issue, to prefund some of the nearly €20 billion in maturities expected over the next 3 months. However, bulls who expect this "good news" to force short covering may have to put the champagne on ice. Dow Jones previously quoted the former Public Debt Management Agency head Spiros Papanikolaou (who was replaced by former Goldman operative Petros Christodoulou), "There will be another syndication, most likely 10 years. We will go
for EUR3 billion to EUR5 billion and depending on the market reaction
it could be more, although a 10-year bond is a bit more difficult" to make their case that the new auction is imminent. Yet it is this very same Papanikolaou, who when quoted by Debtwire, pours cold water all over the bulls plans: "Reports about us imminent issuing a ten-year bond auction are totally inaccurate - there is no truth in it at all." And so the great Greek disinformation sopa opera continues.
More from Debtwire:
Papanikolaou resigned this week as general director of the Greek Public Debt Management Agency and will be replaced by banker Petros Christodoulou. His resignation - which comes after concerns over Greece's public debt fuelled the decade-old euro's biggest currency crisis - was one reason why the bond was being postponed, he said.
Papanikolaou said it was standard practice in Greece to replace senior civil servants after a change in government. He has remained in place as the head of the country's debt agency since the Panhellenic Socialist Movement, Pasok, came to power in October last year.
With Greece needing to raise almost €17 billion to meet bond redemptions in April and May, expectations for a second bond issue remain high. The country issued €8 billion of five-year paper with a 6.1% coupon late January. That bond was trading at mid swaps plus 380 bps today, some 5 bps wider than yesterday and 30 bps wider from mid swaps plus 350 bps at release, an analyst said.
Friday was also the Eurostat deadline by which Greece was supposed to provide the EU's statistic arms all details of currency swaps since 2001.
All in all, it is shaping up to be a somewhat disappointing week for all those expecting good funding news out of Greece.
Alternatively, where the good news may end up coming from is from Germany of all places (contrary to prevailing opinion yet again), courtesy of the latest disclosure from Spiegel magazine, which notes that Germany's finance ministers have sketched out a loss-sharing plan in which all European countries with Greek banking exposure will pool into a €20-25 billion Greek rescue fund.
Citing "initial considerations" by the ministry, German weekly Der
Spiegel said the share of financial aid for Greece would be calculated
according to the proportion of capital each country holds in the
European Central Bank.
A spokesman for the German finance
ministry said he would not comment on the report, which stated that the
financial assistance should take the form of loans and guarantees.
The
report said all euro countries would shoulder the burden and that
Germany's share in the package would amount to 4-5 billion euros, and
be handled by state-owned bank KfW.
Of course all this is happening while Papandreou keeps screaming that Greece is most certainly not in need of bailing out (economic collapse courtesy of ongoing general strikes notwithstanding).
Yet more relevantly, Angela Merkel has finally gotten the message that any perceived bail out of Greece, in full or in part would be political suicide:
Germany in public argues that leniency would take pressure off
Athens and other euro zone debtors to cut their budget deficits. Behind
the scenes, lawmakers acknowledge that Berlin has prepared measures if
a rescue becomes inevitable.
Merkel's position has been
complicated by the fact the country is embroiled in a highly charged
debate on the sustainability of Germany's welfare state.
This has
helped to galvanize public opposition to Berlin funding a bailout just
as her center-right coalition braces for a big test of its popularity
in May, when voters go to the polls in Germany's most populous state,
North Rhine-Westphalia.
Yet the hard place to the rock of an election loss is the spectre of a collapse of the German banking system.
A senior financial official in the ruling coalition told Reuters
last week Germany was considering using the KfW to buy Greek government
bonds. A separate proposal saw the KfW issuing guarantees to German
banks that bought the Greek bonds.Separately, Der Spiegel said
that an internal report by Germany's financial market watchdog BaFin
concluded that German banks could be seriously threatened if Greece or
other countries including Spain, Portugal and Italy become insolvent.
The bottom line is that whoever was responsible for the British avoidance of the EMU, has to receive a trillion dollar annual stipend (in 2020 dollars) for this one act that has so far saved the island nation from sharing a fate similar to the rest of the peripheral eurozone countries, allowing Britain, alongside the Swiss, the US and Japan, to have roughly equal footing in the great race to the currency bottom (sorry euro, no such luck for you).
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Britain is exposed to 20% of Greek debt, more than Germany. How is that related to Eurozone?
The (presumed) assumption here being that the U.K., having a free-floating currency apart from the Euro, may be able to manage potentially problematic Greek debt issues by devaluation of the pound, whereas the Germans, by sharing the same currency as Greece (and the other peripheral Eurozone countries mentioned), now find themselves waking-up next to a woman who is proving to be much hairier than when the relationship was consummated, and the illumination was more forgiving.
Leadership. Morals. What's my cut?
Any one who thinks that the Germans will allow themselves to be publicly seen bailing out the Greeks, in any way, is smoking something.
The only possibility is a surreptitious bid for GGBs by entities unknown.
Yeah, and if that would becomme publicly known, all hell would brake loose in Germany.
Cheers, Werner
What's funny is Dubai's resolution had more teeth than what we're seeing in eurozone. Yet, everything seems to be ignored since the "correction" is now over. At what point do these fluffy foo foo markets ever respond accordingly to its own reality?
At what point do these fluffy foo foo markets ever respond accordingly to its own reality?
After complete distribution is made to bagholders.
Well, we better get ready now 'cause we've been suckered one too may times. Never thought I'd be so angry witht he establishment allowing conditions to persist.
It's a bummer that we could only vote for one or the other party. Will we ever see an Independent come in and fix things? Man, that sounds so stupid to even as I write.write it!!
One wonders why people go postal! The financial version is defy the pundits and stick to what you believe in and if you're right, you'll be better off than you were. Point is, never to be suckered again.
The IMF will be the bagholder for Greece.
The political spin will make it seem as if the IMF will make mad bank by doing so.
I am equally sure the US taxpayer will somehow take it up the tailpipe via the IMF.
Simple--Uncle Stupid backs up the IMF loan injection via a guarantee/ credit enhancement from the ESF or we can back up the Bundesbank or the UK:
http://www.ustreas.gov/offices/international-affairs/esf/
Looks like the Euro is going to crash even further, adding more benefit for Goldman's Prop Desk.
And to clarify the matter further... ;-)
"Feb. 20 (Bloomberg) -- Germany’s Finance Ministry said it has no specific plans for helping Greece combat its deficit crisis, denying a magazine report that euro-area governments may offer as much as 25 billion euros ($34 billion) in aid.
It’s “incorrect” that Germany is considering a “concrete” plan for countries sharing the euro to pump billions in financial aid to Greece, ministry spokesman Martin Kreienbaum said in an e-mailed statement. “The Finance Ministry has taken no decisions in this regard,” the statement said."
When Greece announces, beware. It's not what it seems.
IMF to them is out of the equation. They still want freedom to inflate, extend and pretend until someother country blows. The only way out may be some Odyssean maneuver.
Come to think of this, that's what Bernanke is waiting, (a European Country to go up in smoke.) Then, and only then, his suicidal thoughts will go away.
I wouldn't count out the Euro, those boys have been through two world wars, genocide, etc. They're not about to fold over some DEBT issues. I'm sure that they have something up their sleeves and something cooking in the shadows.
+1
I thought the 25 billion euro help that was announced on Saturday was later denied.
Per BBC:
"Meanwhile, a German magazine reported the country's finance ministry had drafted a plan for eurozone countries to provide Greece with aid worth up to 25bn euros (£22bn) for Greece.
Der Spiegel said each country would pay according to its proportion of capital in the European Central Bank.
However a German finance ministry spokesman "completely rejected" the speculation. "
When your hand is gangrenous you cut it off (unfortunately), you don't try to save it by by hoping that the hand will cure itself, otherwise the contagion spreads until it's infected the rest of the limbs and the whole body dies.
When one govt saves another the risk (contagion) is passed on to the other country in an attempt to hide it from sight and pacify everyone. Eventually it will make little difference, they're running out of safe places to hide the rotting corpse.
Would be better to cut the limb (Greece) loose before the rest become infected. Unfortunate for those banks who are caught but it's much like a spanking from father, would you prefer to take it now or later?
Why all the hubub if Greece is only 2% of the euro zone's GDP?
After all, California (and its $20B deficit) makes up 13% of the US GDP.
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