Draghi Again Confirms ECB Pari Passu Status Is A Pipe Dream

Tyler Durden's picture

Draghi has said lots of things in today's conference, most of them regurgitated. So far the most notable item is what ha already been implied on several occasions, namely that the ECB will not restructure its holdings of Greek bonds (something restructuring professionals call debt for equity in other circumstances) for one reason:

  • DRAGHI: RESCHEDULING GREEK BONDS WOULD BE MONETARY FINANCING

And there goes any hope that the Greek bonds currently in the market will soar due to an OSI restructuring. It also means that the ECB was merely, well, lying when it said that any future bond purchases under the OMT will be Pari Passu. The won't be, as this would imply, as Draghi said, a monetary financing should a PSI/OSI  restructuring ever take place in Spain. Which it will.

Other things Draghi has said in brief:

  • DRAGHI SAYS CONDITIONALITY WILL PROTECT ECB INDEPENDENCE - by this he means the ECB will take over any country that applies for aid.
  • DRAGHI SAYS ECB IS READY WITH OMT `TODAY'
  • DRAGHI SAYS ECB HAS FULL-EFFECTIVE BACKSTOP MECHANISM IN PLACE - just need conditionality. see above
  • DRAGHI SAYS IT WAS UNANIMOUS DECISION ON RATES
  • DRAGHI SAYS ECB DIDN'T DISCUSS INTEREST-RATE CUT TODAY
  • DRAGHI SAYS CRISIS COUNTRIES MADE PROGRESS ON UNIT LABOR COSTS - even better progress on unit slavery costs.
  • DRAGHI SAYS CRISIS COUNTRIES HAVE MADE `NOTICEABLE PROGRESS' - to further accelerate their collapse?