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Cyprus Bonds Slump To 3-Month Lows As IMF Demands Haircuts

Tyler Durden's picture




 

As Greek bonds go from unintended consequence strength to strength, helped by a EU planned buyback, so Cypriot bonds have been monkey-hammered in the last week or so (and dramatically so today) as the IMF withholds support, demanding a haircut is imposed. As Speigel notes, Cyprus did its part on Wednesday night by passing a 2013 budget with far-reaching austerity measures, yet the would-be creditors (providing the bailout funding) are at odds with the IMF playing 'bad cop'. The IMF is demanding a partial default (rather like being half pregnant) involving haircuts for private creditors before it joins the deal. The IMF is concerned that, despite the austerity measures the country has now adopted, it still wouldn't be able to shoulder the interest payments due on its debt - gracious, where have we heard that uncertainty before? "The situation in Cyprus is much worse than it is in Greece," one high-ranking EU official said, and its hard to argue when you note that with a GDP of EUR18bn in 2011, its banking system has 'assets' of EUR150bn, and fiully EUR10bn of the EUR17bn bailout (should it appear) is aimed at propping up the idiocy of the banking system!

 

 

Chart: Bloomberg

 

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Thu, 12/20/2012 - 10:16 | 3082362 SheepDog-One
SheepDog-One's picture

I dont see how people can call this chaotic roller coaster 'stabileetee'!

Thu, 12/20/2012 - 10:20 | 3082383 GetZeeGold
GetZeeGold's picture

 

 

Please stop rocking the boat....I think I'm gonna hurl.

Thu, 12/20/2012 - 10:19 | 3082379 agent default
agent default's picture

They are not on it.  You are.

Thu, 12/20/2012 - 10:22 | 3082390 Peter Pan
Peter Pan's picture

Nothing makes sense any more and this is how things will continue until people look beyond the manipulated facade of the markets. At that point the ignorance of people will evaporate and reality will manifest itself with a suddeness and viciousness that will surprise most of us.

Thu, 12/20/2012 - 10:23 | 3082392 TraderTimm
TraderTimm's picture

More like "Dare-cuts".

 

Thu, 12/20/2012 - 10:25 | 3082400 Flakmeister
Flakmeister's picture

Absolute top-shelf article on the Bakken...

http://www.resilience.org/stories/2012-12-19/future-production-from-u-s-shale-or-tight-oil

Get used to hearing about a "shark fin" production curve...

Thu, 12/20/2012 - 11:10 | 3082543 falak pema
falak pema's picture

Jonah's whale becomes a shark fin in deflation dive? 

Jaws is say! Jaws  of tar sand mayhem and claws of fracking flame displays, lets hope there won't be fukushima type earth grumblings n rumblings. 

Where have all the flowers gone in the dust bowl renaissance? 

Just to prolong the fracking hopium, after Cameron and his charge of the light brigade in Scotland, Hollande of France has signed an agreement in Algeria to try out "new non-hydraulic" fracking techniques (pneumatic?) which are supposedly less polluant and just as efficient...in Algeria! The French foreign legion is back! 

So if it don't work no skin off French nose! 

I love these great helping hands, to start a "new non colonial relationship" with sovietised Algerian regime, despised by its own young, restless and unemployed people,  and reap their unchartered RM treasures of the Sahara; of which Oil and gas is known, Uranium and minerals unknown but hopefully plentiful. 

A new dawn in French-Algerian industrial hand shaking and hopefully Mali neutralisation of Al Qaeda presence as collatleral spin off.

Whatever the State does or doesn't, you can be sure of one thing : THe Oligarchs are fine and well and Renault gets a 3 year market exclusivity. Butt bashed at home, eeking out small gains in protected territories, hopefully big markets of tomorrow. 

Algeria doesn't need a Lagarde crew cut like Cyprus, it has oil and Gas @ 120 $/bbl or equivalent in LNG.

Thu, 12/20/2012 - 10:26 | 3082404 timbo_em
timbo_em's picture

In Spain they fixed a dead on balls accurate well stress-tested € 4.4T banking system with € 60B, so fixing Cypurs' € 150B banking system with € 10B should be more than enough, right?!

What...you're saying Spain isn't fixed...

Thu, 12/20/2012 - 10:52 | 3082490 Navymugsy
Navymugsy's picture

When you drive through Limassol and Nicosia hundreds of storefronts are already empty with "to let" signs plastering almost every building. To think we're only at the beginning of the pain. I might have to get out of here next year or face having to become a doomsday prepper for real.

Thu, 12/20/2012 - 10:56 | 3082514 masterinchancery
masterinchancery's picture

How about just forcing all their banks out of business? Sacrilege!

Thu, 12/20/2012 - 10:58 | 3082517 Scalaris
Scalaris's picture

I'd primarily fault whomever did not veto the Greek bond haircut, which cost us 75% of the bailout, purely out of a kneejerk reaction, but prior to the approval of this year's budget, the rampantly improvident spending revealed by various sources was so dumbfounding, that these measures impose seem somewhat moderate, compared to what would actually be needed in order to balance such level of profligacy. 

I'm talking ridiculous exorbitance regarding spending vis-a-vis uber-cosseted public figures with drivers and sponsored vacation housing, as well as a nexus of banking boards/public workers/corporate elite beneficiaries who abused the government teat for decades.

A true banana republic by any definition - fun fact: uncollected police fines close to a cool € billion. 

Thu, 12/20/2012 - 11:01 | 3082525 Navymugsy
Navymugsy's picture

Luckily for us there are thousands of banana trees in Paphos. Can't be a real banana republic without the trees!

Thu, 12/20/2012 - 11:37 | 3082647 Cian
Cian's picture

Ireland deserves a retro-active deal on the c.€64 billion of bank debt that has been foisted onto its public. If not for the sake of fairness, for the sake of the Greek, Spanish, Cypriots etc who are about to be forced through swingeing cuts to basic services, as their taxes are hiked and their middle/working classes get butchered. 

Europe needs to place a light at the end of the very long, very dark austerity tunnel that these economies are being forced into. If I was Cypriot I'd say let the banks fail and burn the bond holders- why go the route of Ireland when we can go the route of Iceland/Greece. The ball is in Europe (ie Germany's) court.

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