Creditors

Tyler Durden's picture

Frontrunning: January 18





  • Here we go again: IMF Said to Seek $1 Trillion Resource-Boost Amid Euro Crisis (Bloomberg)
  • China said to Tell banks to Restrict Lending as Local Officials Seek Funds (Bloomberg)
  • EU to Take Legal Action Against Hungary (FT)
  • Portugal Yields Fall in Auction of Short-Term Debt (Reuters)
  • US Natural Gas Prices at 10-Year Low as Warm Weather Weakens Demand (Reuters)
  • German Yield Falls in Auction of 2-Year Bonds (Reuters)
  • World Bank Slashes Global GDP Forecasts, Outlook Grim (Reuters)
  • Why the Super-Marios Need Help (Martin Wolf) (FT)
  • Chinese Vice Premier Stresses Government Role in Improving People's Livelihoods (Xinhua)
 
Tyler Durden's picture

The Latest Greek Creditor Negotiations Update: Coercive, Yet Not, At The Same Time





Late night media is abuzz with two reports, one from the NYT and one from The Telegraph, which unfortunately confirm Credit Suisse's decision to ignore the Greek situation entirely due to openly contradictory news.

Which, of course, is the oldest trick in the book - when in doubt, leak opposing news, in this case whether or note the Greek default will be coercive or not, in hopes the good news trumps the bad, and nobody notices.

 
Tyler Durden's picture

Bloomberg Reports That Greek Private Creditor Deal Near, At 32 Cent Recovery, According To Hedge Fund Involved





Last year it was bank posturing, coupled with Germany and the rest of the Eurocore countries, when it comes to Greece. Now it is the hedge funds. Bloomberg has reported that the Greek private creditors have "reached a deal" with Greece on existing debt which "would give creditors 32 cents per euro", or a 32% recovery according to Marathon Asset Mgmt CEO Bruce Richards, who until recently was a bondholder, but recently has been rumored to have dumped his holdings, which makes one wonder why or how he is talking for the creditor committee. Of course, with Greece now a purely bankruptcy play, we expect various ad hoc splinter "committees" to emerge, coupled with an equity committee as well (yes yes, we jest). Bloomberg reports also that Richards is "highly confident" a deal will get done. Nonetheless, the Marathon CEO expects Greece won’t make the €14.5 billion ($18.5billion) bond repayment scheduled for March 20. However, he does see a deal with creditors to be in place before then. For now the Greek government has declined to comment. We fully expect the IIF's Dalara to hit the airwaves shortly and to make it all too clear that the implied 68% haircut is sheer lunacy. Naturally, should this deal come to happen, we can't possibly see how Portugal, Spain or Italy would then sabotage their economies just so they too can enjoy 68% NPV haircuts on their bonds. Finally, even if Marathon likes the deal, all it takes is for one hedge fund hold out to necessitate the application of Collective Action Clauses which would blow the deal apart, create a two-tiered market, and effectively create the perception that the deal was coercive.

 
Tyler Durden's picture

$10 TRILLION Liquidity Injection Coming? Credit Suisse Hunkers Down Ahead Of The European Endgame





When yesterday we presented the view from CLSA's Chris Wood that the February 29 LTRO could be €1 Trillion (compared to under €500 billion for the December 21 iteration), we snickered, although we knew quite well that the market response, in stocks and gold, today would be precisely as has transpired. However, after reading the report by Credit Suisse's William Porter, we no longer assign a trivial probability to some ridiculous amount hitting the headlines early in the morning on February 29. Why? Because from this moment on, the market will no longer be preoccupied with a €1 trillion LTRO number as the potential headline, one which in itself would be sufficient to send the Euro tumbling, the USD surging, and provoking an immediate in kind response from the Fed. Instead, the new 'possible' number is just a "little" higher, which intuitively would make sense. After all both S&P and now Fitch expect Greece to default on March 20 (just to have the event somewhat "priced in"). Which means that in an attempt to front-run the unprecedented liquidity scramble that will certainly result as nobody has any idea what would happen should Greece default in an orderly fashion, let alone disorderly, the only buffer is having cash. Lots of it. A shock and awe liquidity firewall that will leave everyone stunned. How much. According to Credit Suisse the new LTRO number could be up to a gargantuan, and unprecedented, €10 TRILLION!

 
Tyler Durden's picture

S&P Says Greek Default Imminent





Time for the dominos to fall where they may: head of sovereign ratings at S&P Kraemer spoke on Bloomberg TV, and said the following:

  • KRAEMER: GREECE, CREDITORS `RUNNING OUT OF TIME' IN DEBT TALKS -BBG
  • KRAEMER: EURO LEADERS HAVEN'T TACKLED CORE UNDERLYING PROBLEMS -BBG
  • KRAEMER SAYS EUROPE MUST DEAL WITH IMBALANCES, COMPETITIVENESS -BBG

And the punchline:

  • KRAEMER SAYS HE BELIEVES GREECE WILL DEFAULT SHORTLY - RTRS

The only thing he did not add is that the default will be Coercive. What happens next is anyone's guess, but whatever it is it is certainly priced in. Also, let's not forget that the inability of the market to react to any news ever again is most certainly priced in.

 
Tyler Durden's picture

The Rise Of Activist Sovereign Hedge Funds, The "Subordination" Spectre, And The Real "Coercive" Restructuring Threat





When Zero Hedge correctly predicted the imminent rise of the "activist sovereign hedge fund" phenomenon first back in June 2011 (also predicting that the "the drama is about to get very, very real") few listened... except of course the hedge funds, such as Saba, York, Marathon, and others, which realized the unprecedented upside potential in such "nuisance value", long known to all distressed debt investors who procure hold out stakes, and quietly built up blocking positions in European sovereign bonds at sub-liquidation prices. Based on a just released IFRE report, the bulk of this buying occurred in Q4, when banks were dumping positions, promptly vacuumed up by hedge funds. More importantly, we learn from IFRE's post mortem of what is only now being comprehended by the market as having happened, is the realization that the terms "voluntary" and "collective action clauses" end up having the same impact as a retailer (Sears) warning about liquidity (and the result being the start of the death clock, with such catalysts as CIT pulling vendor financing only reinforcing this) to get the vultures circling and picking up the pieces that nobody else desires. As a reminder, it was again back in June we predicted that "the key phrase (or two) in the proposed package: "Voluntary" and "Collective Action Clauses"." Why? Because what this does is unleash the prospect of yet another word, which is about to become one of the most overused in the dilettante financial journalist's lingo: "subordination" or the tranching of an existing equal class of bonds (pari passu) into two distinct subsets, trading at different prices, and possessing different investor protections (we use the term very loosely) with the result being an even greater demand destruction for sovereign paper.

 
Tyler Durden's picture

Frontrunning: January 16





  • Jon Huntsman Will Leave Republican Presidential Race, Endorse Mitt Romney, Officials Say (WaPo)
  • Dont laugh - Plosser: Fed Tightening Possible Before Mid-2013 (WSJ)
  • Greece’s Creditors Seek End To Deadlock (FT)
  • France Can Overcome Crisis With Reforms – Sarkozy (Reuters)
  • Nowotny Says S&P Favors Fed’s Bond Buying Over ECB’s ‘Restrictive’ Policy (Bloomberg)
  • Bomb material found in Thailand after terror warnings (Reuters)
  • Ma Victory Seen Boosting Taiwan Markets as Baer Considers Upgrading Stocks (Bloomberg)
  • Japan Key Orders Jump; Policymakers Fret over Euro (Reuters)
  • Renminbi Deal Aims to Boost City Trade (FT)
 
Tyler Durden's picture

How Safe Are Central Banks? UBS Worries The Eurozone Is Different





With Fed officials a laughing stock (both inside and outside the realm of FOMC minutes), Bank of Japan officials ever-watching eyes, and ECB officials in both self-congratulatory (Draghi) and worryingly concerned on downgrades (Nowotny), the world's central bankers appear, if nothing else, convinced that all can be solved with the printing of some paper (and perhaps a measure of harsh words for those naughty spendaholic politicians). The dramatic rise in central bank balance sheets and just-as-dramatic fall in asset quality constraints for collateral are just two of the items that UBS's economist Larry Hatheway considers as he asks (and answers) the critical question of just how safe are central banks. As he sees bloated balance sheets relative to capital and the impact when 'stuff happens', he discusses why the Eurozone is different (no central fiscal authority backstopping it) and notes it is less the fear of large losses interfering with liquidity provision directly but the more massive (and explicit) intrusion of politics into the 'independent' heart of central banking that creates the most angst. While he worries for the end of central bank independence (most specifically in Europe), we remind ourselves of the light veil that exists currently between the two and that the tooth fairy and santa don't have citizen-suppressing printing presses.

 
Tyler Durden's picture

The Real Dark Horse - S&P's Mass Downgrade FAQ May Have Just Hobbled The European Sovereign Debt Market





All your questions about the historic European downgrade should be answered after reading the following FAQ. Or so S&P believes. Ironically, it does an admirable job, because the following presentation successfully manages to negate years of endless lies and propaganda by Europe's incompetent and corrupt klepocrarts, and lays out the true terrifying perspective currently splayed out before the eurozone better than most analyses we have seen to date. Namely that the failed experiment is coming to an end. And since the Eurozone's idiotic foundation was laid out by the same breed of central planning academic wizards who thought that Keynesianism was a great idea (and continue to determine the fate of the world out of their small corner office in the Marriner Eccles building), the imminent downfall of Europe will only precipitate the final unraveling of the shaman "economic" religion that has taken the world to the brink of utter financial collapse and, gradually, world war.

 
Tyler Durden's picture

Frontrunning: January 13





  • China’s Forex Reserves Drop for First Quarter Since 1998 (Bloomberg) - explains the sell off in USTs in the Custody Account
  • Greek Euro Exit Weighed By German Lawmakers, Seen as Manageable (Bloomberg)
  • Greek bondholders say time running out (FT)
  • Housing policy to continue (China Daily)
  • Switzerland’s Central Bank Returns to Profit (Reuters)
  • US sanctions Chinese oil trader (FT)
  • Obama Starts Clock for Congress to Vote on Raising Federal Debt Ceiling (Bloomberg)
  • Turkey defiant on Iran sanctions (FT)
  • ECB’s Draghi Says Weapons Working in Debt Crisis (Bloomberg)
  • Greece to pass law that could force creditors in bond swap (Reuters)
 
Phoenix Capital Research's picture

Wait... Wasn't the Greek Issue Solved Already?






In plain terms, both the IMF and Germany have stated they will help Greece if and only if Greece agrees to various measures… which they KNOW Greece cannot agree to. And so the Greek issue has become a kind of “hot potato” that no one wants to keep holding. Meanwhile, every day that this issues doesn’t get solved, the EU as a whole moves closer to systemic failure.

 
Tyler Durden's picture

Merkel Party Lawmaker Says Greece Must Leave Eurozone





Even as we are drowned by yet another avalanche of lies and cow feces that the Greek private sector bailout negotiation is going well, despite everyone knowing very well by now that various hedge funds like Saba, York and CapeView are holding the entire process hostage and the culmination will be a CDS trigger, the underlying dynamics of the Greek "bailout" once again resurface, which are and always have been all about Germany and the tensions within its various political parties. And unfortunately at this point things are looking quite bad for Greece. As Bloomberg reports, "Greece will have to exit the euro area as it struggles under a mountain of debt, unable to regain its competitiveness without having its own currency to devalue, a senior lawmaker in Chancellor Angela Merkel’s party said. The comments by Michael Fuchs, the deputy floor leader for Merkel’s Christian Democratic Union, contradict the chancellor’s stance in a sign of the domestic headwinds she faces in leading Europe’s efforts to keep the 17-member euro area intact. With the debt crisis into its third year, Merkel is due to join CDU lawmakers at a two-day policy meeting beginning tomorrow in the northern German city of Kiel." The truth hurts: "For Greece, “the problem is not whether they are capable of paying their loans -- they will not, not at all, never." So, why are we optimistic on Europe again? Oh yes, because European banks issued tons of equity and now have a capital buffer to the imminent hurricane that will be unleashed once the Greek restructuring finally enters freefall mode and the country leaves the Eurozone. No wait, that's not right: only UniCredit tried that and its stock collapsed by 50%. Must be something else then - oh yes, Italy successfully sold debt maturing in one year!

 
Tyler Durden's picture

Frontrunning: January 11





  • Europe’s $39T Pension Threat Grows as Economy Sputters (Bloomberg)
  • Monti Warns of Italy Protests as He Meets Merkel (Bloomberg)
  • Bernanke Doubling Down on Housing Bet Asks Government to Help: Mortgages (Bloomberg)
  • Europe Banks Resist Draghi Bid to Avoid Crunch by Hoarding Cash (Bloomberg)
  • Europe Fears Rising Greek Cost (WSJ)
  • ECB’s Nowotny Sees Risk of Mild Recession in Euro Region (Bloomberg)
  • Republican Senators Criticize Fed Recommendations on Housing (Bloomberg)
  • Spanish Banks Try to Build Their Way Out of Home Glut (WSJ)
  • Europe Stocks Fluctuate After German Auction (Bloomberg)
 
Tyler Durden's picture

Hedge Funds Now Hold Future Of Europe Hostage





Payback sure is a bitch. After being demonized for everything from the tiniest tick down in the EURUSD, to blowing out spreads in CDS, to plunging stocks across the insolvent continent, hedge funds, long falsely prosecuted for everything, even stuff they patently did not do, are about to have their day in the sun, precisely in the manner we predicted back in June of last year when we posted: "Greek Bailout #2 Is Dead On Arrival: A Few Good Hedge Funds May Have Called The ECB's Bluff, And Hold The Future Of The EUR Hostage." Back then we wrote: "we may suddenly find ourselves in the biggest "activist" investor drama, in which voluntary restructuring "hold out" hedge funds will settle for Cheapest to Delivery or else demand a trillion pounds of flesh from the ECB in order to keep the eurozone afloat. In other words, the drama is about to get very, very real. And, most ironically, a tiny David is about to flip the scales on the mammoth Goliath of the ECB and hold the entire European experiment hostage..." Sure enough, we were right yet again. Ekathimerini writes: "Hedge funds are taking on the powerful International Monetary Fund over its plan to slash Greece's towering debt burden as time runs out on the talks that could sway the future of Europe's single currency. The funds have built up such a powerful positions in Greek bonds that they could derail Europe's tactic of getting banks and other bondholders to share the burden of reducing the country's debt on a voluntary basis." Oh no, they will let it happen, but first Europe will pay, with real interest, for every single incident of hedge fund bashing and abuse over the past 2 years. We estimate the final tally, to US taxpayer mind you, will be about $20 billion, to remove the "nuisance factor" of hold out hedge funds. Congratulations Europe - you have proven to be a continent full of idiot "leaders" once again.

 
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