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Let's Make a Deal: Greek Debt Swap Discussions Continue As Deadline Looms
Are we having fun yet? The market sure seems to be (do algo's get headaches?) As tomorrow's deadline approaches, the rhetoric continues to heat up on both sides of the PSI argument. On one side you have those who say the holders of Greek debt have no choice, either they sign up or they are forced via CAC to take the haircuts, and run the risk that apparently in some warped world may not trigger a credit event. This is the camp that says they simply cannot allow a default to take place on March 20th, no matter the cost. Nevermind the LTRO's, which are only resulting in banks foregoing the carry trade and parking the money back at ECB, this entails the ECB hitting Ctrl+P, buying directly, and having the keys stick indefinitely. The sterilization thing isn't working so well, as banks don't have any collateral left, so direct buying would be the end result. Which would be neat, they'd enjoy that inflation.
On the other hand, there are those that say to hell with it, let this thing finally meet it's inevitable demise & have a hard default. In which case they'll trigger the credit event (presumably) and get paid their insurance (albeit settled against the cheapest to deliver bonds). The glaringly obvious risk here is this outcome would likely lead to bank runs and total chaos throughout the Eurozone.
As ZH points out, as of tonight they don't have the 75% participation rate necessary to force the haircuts via CAC's.
So, who's ready to make a deal?
A decent summary of options below:
"This is silly. We're hoping to get Greek debt down to 120% of GDP by 2020. That's still to me unsustainable."
"There's a different issue, which is the Collective Action Clause. If Greece gets away with a CAC and you're in Lisbon or Madrid, aren't you going to want the same thing? Will Monti want the same thing if Italy's economy starts to contract and he doesn't get growth"
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When you agree to pay off your credit card at 50% don't they consider that a default?
Fucking circus. You watch if they don't meet the deadline they'll extend it and/or change the terms.
just as much as banks and governments are unsound, so are insurance companies.
http://expose2.wordpress.com
another Monti
but when it is done the number will be more like 95%
The algos and headline chasers will be milking this for all it's worth, which isn't much. Reality will come back to bite, hopefully soon.
It's now 0805 GMT with a reported (who knows how accurate) 60.5% participation rate.
Less than 12 hours to get the last 14.5% and avoid a hard default.
God, I LOVE this soap opea - it has been going down to the wire again, and again, and again since at least last June. Makes a lot of ZHers scream "Just Default, BitcHez"!
Me, I love it - best entertainment in the financial world (I can't stand the Cramer clown).
I must be getting cynical in my dotage, but it seems pretty clear they will get the 75% needed to CAC, no matter how much they have to fudge the numbers to get there.
Then the next drama: does the CAC trigger become a 'credit event'? Well of course it does, unless ISDA sez it doesn't = MORE drama!
Damn, it doesn't get much better than this.
On the Other Hand: Just Default, BitCHez!
Portugal's turn...