Moody's Says "Voluntary" Debt Rollover Would Be Credit Event

Tyler Durden's picture

Yep, the headline barrage continue - from Reuters:

  • Moody's sovereign head says more likely than not that Greek debt roll-over would be a credit event
  • Moody's sovereign head says hard to see how any Greek roll-over would be truly voluntary, would therefore be a default
  • Moody's sovereign head says any Greek restructuring would to big to be effective therefore disruptive for ECB, Banks
  • Moody's sovereign head says impossible to have orderly and effective Greek debt restructuring
  • Moody's head of sovereign risk says Euorzone, ECB has resources to contain short term financial pressures
  • Moody's says current Greek rating sees 50% default risk in 3-5 years

Naturally, unless this changes and Moody's is bribed with enough worthless paper to keep its mouth shut, this means game over for the "voluntary" bailout track as we predicted, as it implies an event not so much of default (which certainly will occur), which is largely irrelevant, but of remarking of ECB Greek bond collateral, which will certainly be greater than the 4.25% haircut needed to push the ECB into insolvency.

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swissinv's picture

why is the EU not buying the greek gov bonds from the banks and let Greece default? The worst thing the Greeks can do is to sell their assets before defaulting.

blindfaith's picture

selling the Greek assets for debt IS the plan.  And it IS the plan in the USA too.  Wait and see,

oogs66's picture

I agree.  Default first then sell the assets to get new financing for a new regime.  Don't waste it at some desperate attempt to stay solvent for a few more months and to protect other countries' exposure.

AldoHux_IV's picture

The old IMF formula of taking over a country through an LBO.

buzzsaw99's picture

Moody's says exactly what the banks want them to say.

rsnoble's picture

Solution: Throw everyone off unemployment, push grandma off the cliff, digitally transfer a long line of zeros to the EU and blow up anyone wanting to trash the dollar.  Another great fucking day.  Think im gonna pop some pills, ice down the beer and get the 4 wheelers out and go shoot the empties at the creek.

White.Star.Line's picture

At least someone is looking at the big picture and coming up with real solutions!

blindfaith's picture

Tyler and ZH...I absolutely adore your frankness and no holds bared words for the deserving!

Bob's picture

Yesterday Fitch, today Moody's.  Same story, different day. 

scratch_and_sniff's picture

Same bung's, different day.

Bob's picture

Meanwhile, the most comprehensive and coherent article I've seen on this situation languishes on the back pages with nary a comment:

slaughterer's picture

"voluntary restructurings require 100% of investors to accept the new terms in order to avoid triggering a default, an almost impossible hurdle."

"an almost impossible hurdle"--what is the "almost" doing in this phrase?  It is impossible, and will be impossible.  "an absolutely impossible hurdle" would have been better.  This would proceed so much smoother in a US court: look at GM, CIT, et. al.  they created the template for restructuring already a few years ago.    

oogs66's picture

that is the problem with sovereign debt, you have very few rights as a lender, and an even more difficult time enforcing them.  that is why distressed debt guys and vulture funds don't do much in sovereigns.  figuring out restructuring of a corporate is much simpler as there are enforceable laws letting creditors get as much as they can

Thisson's picture

At least until Obama comes in and changes the rules, you mean, right?

White.Star.Line's picture

Ancient Greece was the model and foundation for modern western civilization. The symbolism of their collapse should speak to all of us.

Robslob's picture

So if the EUR crashes, ECB insolvent then John Taylor makes out like a bandit on his dollar long position and gold gets a correction to the downside?

string's picture

CDS trigger?


oogs66's picture

Voluntary restructuring (even if strong armed) is NOT a Credit Event for CDS.

scratch_and_sniff's picture

"more likely than not" I hear the licking of lips.

Re-Discovery's picture

Fisher just ended a (personally) impressive bit on Squawk Box.  Among the zingers calmly asserted was that the Fed was not political.  I actually think he might believe it.  Complete Orwellian WordSpeak bullshit.  Locate the Fed in S Dakota if it isn't political.  Keep Greenspan away from the DC party circuit if it isn't political.  Fisher this morning then Bernanke later today.  All to tell us the Fed's calm all-knowing hand is at the wheel.  Futures back to higher levels. 

Road to ruin being cleared.  Fishers finely coiffed head -- as pleasant sounding as it may be -- needs to roll alomng with the 'doves' on the Fed.

Cdad's picture

Correct.  Fisher's commentary today was quite disappointing.  Even the hawks are attempting "confidence building."  Because there is none.


alien-IQ's picture

and this is causing the /ES to surge because....???? (they roll like dat?)

I still can't quite figure out why a Greek (and ECB) collapse is causing the USD to nose dive and the Euro to hit new highs.

Am I gonna have to start drinking in the mornings to be able to understand this?

Re-Discovery's picture

Think Tyler's "everyone rushing to the same side" of the boat analogy.  There will be a reversal.

Cdad's picture

You're on a roll [2 for 2 IMO].  This morning's ramp job will, of course, end badly.  If USD weakness continues, it should be bought and equities sold.


Re-Discovery's picture

Thanks.   Today's a 'hope" day on the street. Hope in the face of reality led a lot of people to the gas chamber.   

oogs66's picture

Why wouldn't the banks just exchange old bonds for new bonds with the same par amount and keep everything market at par? 


The new bonds won't have defaulted and will be current and they won't own any old bonds, so why wouldn't they just keep everything at par?


And for keeping bonds at par, I think the main criteria is if they are currently paying interest.  No matter what the agencies say or do to the rating, I don't think they can force banks to tank a mark to market hit.


MrTrader's picture

What a joke! Impossible "orderly" restructuring? This guy is either the most stupid rating agency sovereign head ever seen or worse than any bankster: a bribed wannabe rookie. EUR/USD 1.4681. New weekly high...

oogs66's picture

i don't think the best and brightest at Moody's went into the sovereign rating program.  So to steal from Matt T at Rolling stone, if Moody's is filled with all the kids who didn't make the cut at the investment banks, then this is the kid who didn't make the cut at Moody's and wound up in sovereign ratings instead of structured, or high yield, or anything else that at least generated them revenues.