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TEPCO Joins Ireland And 130 Other Issues To Be Excluded From Swiss National Bank Repo Basket

Submitted by Tyler Durden on 04/06/2011 12:27 -0400

With TEPCO stock dropping to a fresh all time record overnight at just over Y300, it is pretty clear what the fate of the company is at this point. What was less clear is the fate of TEPCO debt, of which there is just over $90 billion, and which many had expected would be made whole once the company is nationalized. Well, one entity is not taking a chance. Three months after quietly excluding Irish bonds from its General Collateral basket, the Swiss National Bank, by far the most prudent of all central banks in the current race to the bottom regime, has decide to take out 600 million in CHF-denominated bonds out of the eligible basket. Perhaps this is an indication that at least one investor is not quite so sanguine about the lack of impairment in TEPCO bonds: all those who have been selling TEPCO CDS in hopes of a JGB-TEPCO compression trade may want to take note...

From the SNB GC Basket spreadsheet.

And for those curious what causes SNB exclusion, here's the memo:

SNB Collateral

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Wed, 04/06/2011 - 12:39 | 1141459 TruthInSunshine

If history is any guide, Bernanke will buy the debt for 100 cents on the dollar, sell it to Goldman Sachs (Dudley will make the call) for 1/2 a cent on the dollar, and when TEPCO defaults, Bernanke will call Japan and tell them not to sweat it, because he's already called Timmay to ensure Goldman gets 100 cents on the dollar.

Wed, 04/06/2011 - 12:42 | 1141480 SheepDog-One

May have to demand 120 cents on the dollar, with the way the dollar is getting monkeystomped.

Wed, 04/06/2011 - 14:28 | 1142022 covert

debt isn't worth much these days.

http://covert2.wordpress.com

Wed, 04/06/2011 - 12:41 | 1141477 SheepDog-One

Everything just 1 big basketcase now.

Wed, 04/06/2011 - 12:43 | 1141486 RobotTrader

Still watching, when it turns, I'll be all over it on the long side.

Wed, 04/06/2011 - 12:49 | 1141498 Sudden Debt

HITACHI already lost 20% and is still dropping.

Just look at what happened to the subcontractors of BP when they had their "accident".

And at Tepco, the blame game still needs to start with the builders of the reactors.

It'll lose another 20% within 1 month just because and 50% if politicians need a scapegoat.

Wed, 04/06/2011 - 12:54 | 1141508 TruthInSunshine

The week after the tsunami, the volume in FXY was roughly twice its previous highest volume week over the past three years. Almost $1 billion of FXY traded during these five trading days and the currency moved up convincingly.

The rationale for this trade was that the destruction of the tsunami would force Japanese citizens, notorious savers, to cash out of foreign-based assets, and purchase Yen to rebuild the infrastructure that was devastated by the tsunami. However, the following week, as the nuclear plant situation slowly deteriorated, the volume in FXY slowed down to previous normal levels and the price fell significantly.

What does this mean? I believe it means that the basis of the original trade is now being questioned. This price/volume action reveals the questions that are too horrible thus far for anyone to actually speak: Japan may not be rebuilt if the area is uninhabitable. There is now evidence that the soil and ground water in the area are badly contaminated and the situation is anything but contained, meaning we may not have seen the full effects.

Covestor | Market action in the Japanese Yen is worrying

Author: Patrick Clark
Covestor model: Market Neutral Growth
Disclosure: none

...I think Patrick nails it.

Wed, 04/06/2011 - 14:15 | 1141967 Sudden Debt

The Tjernobyl evacuation zone is 500km and nobody may live there for the next 3000 years.

Fucktjitji blabla is WAY worse.

Do the math....

Wed, 04/06/2011 - 12:59 | 1141554 takeaction

I beg you people on zerohedge to read this website about the radiation. Here in Portland Oregon the water is 30 times over the limit. Monitor this site for the truth.

http://enenews.com/

Wed, 04/06/2011 - 14:14 | 1141950 Sudden Debt

I don't know if this helps but...

when I was a student, I bought luminescent condoms and luminescent paint and at night I painted my girlfriend all over in the luminescent paint and put on my luminescent condom.

IT WAS COOL, KINKY AND FUNNY AS HELL!!

So: Always look on the sunny side of life ;)

Wed, 04/06/2011 - 14:42 | 1142066 WALLST8MY8BALL

And here i thought women only glowed AFTER sex!

Wed, 04/06/2011 - 13:34 | 1141759 TradingJoe

Yeah! The Swiss Gov isn't taking any chances, this why they are who they are, less greedy, more substantial! I made a wise choice moving here!

Thu, 04/07/2011 - 06:37 | 1142744 Ratscam

have you forgotten about the 65billion bailout of UBS?

Wise if you,re not working in finance, if you are indeed check out the leverage ratios of UBS and CS, i believe you will reinterpret the word wise pretty soon.

when fiat currency fails it will be global this time

Wed, 04/06/2011 - 14:43 | 1142067 Urban Redneck

The SNB to needs to prep for the USD/EUR pendulum moving back the other way, especially if the move is coupled with a Portugese bailout and Spanish downgrade, which might force the SNB to cover the ECB's ass again.

Wed, 04/06/2011 - 14:45 | 1142082 whisperin

Tyler,

Along with this, your IMF article about putting the GSE's on the balance sheet. It would be interesting if the GSE debt became unacceptable too.

Fri, 04/08/2011 - 23:50 | 1152713 tomster0126

Those dastardly Swiss are so damn good with their money. Why do we never hear of Switzerland encountering any troubles? All i know is i love my Swiss account; it's my nest egg. the rest of Europe can go to hell as far as I'm concerned

TEPCO Joins Ireland And 130 Other Issues To Be Excluded From Swiss National Bank Repo Basket

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