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Greece Faces D-Day On April 9, Will Default Within 30 Days Of Missed Payment, BofAML Says
As “difficult” negotiations between Greece and its creditors drag on, Athens is perilously close to running completely out of cash, and with the banking sector becoming ever more reliant on incremental increases in the ELA ceiling, it may be time to start considering what happens if the cash-strapped Syriza government can’t “borrow” enough public sector funds or otherwise find the money to meet its obligations over the next several months. As a reminder, here’s what the country is up against in the near-term:
If you believe the government (and why wouldn’t you?), Greece will make a scheduled payment to the IMF on April 9 and should have enough cash to carry it through the month. That said, BofAML thinks it’s time to consider the “negative scenarios” that would play out in the event Athens finally comes up short.
Via BofAML:
If Greece misses the payment to the IMF on 9-Apr, this would not necessarily trigger an immediate default. Greece may have an implicit grace period of one month. 1 The sequence of events would be as follows: 1) IMF Staff immediately sends a cable urging the member to make the payment promptly; this communication is followed up through the office of the concerned Executive Director. The member is not permitted any use of the Fund’s resources, nor is any request for the use of Fund resources placed before the Executive Board until the arrears are cleared; 2) After 2 weeks, management sends a communication to the Governor for the member, stressing the seriousness of the failure to meet obligations and urging full and prompt settlement, and 3) After 1 month, the Managing Director notifies the Executive Board that an obligation is overdue.
It is once the Executive Board has been notified of the missed payment that a critical sequence of events could unfold. According to the master financial assistance facility agreement between the EFSF and Greece, the notification of an overdue payment to the IMF would constitute an event of default for the EFSF loans. Such a scenario would risk the EFSF cancelling all or part of its facility, or even declaring the principal amount of the loan to be due immediately. In turn, the acceleration of EFSF loans linked to the PSI exchange would trigger a default event for the PSI GGBs. Even if Greece repays the IMF loan of €458mln on April 9, note that they also have to repay €200mln on May 1 and €763mln on May 12.
Same applies to ECB interest due. Greece also has to pay €274mln of interest on GGBs in April. Assuming it pays €194mln interest to private bondholders on 17-Apr, it will be left with the €80mln interest payment due to the ECB on 20-Apr. The prospectus of the bond held by the ECB indicates a 30-day grace period on interest payments, before a default is declared. Note that this is also the case for the privately held PSI GGBs.
So a missed payment this month triggers a default next month, and at that juncture the following creditors can refer to the ECB’s own projections to determine the likely value of their holdings: “the value of Greek government debt - currently around € 320 billion - in the event of a sudden, 'accident-like' Farewell to the Greeks from the Euro-zone ("Graccident") shrink to around 5 percent of the principal amount.”
Meanwhile, Greece will need to roll over some €1.4 billion in t-bills in two weeks, something which Commerzbank suggests the market should "not ignore" because without access to bailout funds, bill auctions represent a substantial "event risk" for Athens. Furthermore, whatever foreign demand there might have been is likely to dissipate in lockstep with any deterioration in the prospects for a deal with creditors.
Via Bloomberg:
Greece may announce tomorrow that its next t-bill auction will take place on April 8, before the IMF payment scheduled for April 9 (April 10 and April 13 are holidays in Greece).
Primary mkt activity is an event risk for Greece because it’s unlikely that any bailout money will flow over coming days.
Greece will have to roll over EU1.4b of 26-week GTB maturing on April 14 and also EU1b 13-week GTB maturing on April 17.
April 14 GTB rollover may well be more difficult than April 17 one as foreigners probably have more exposure in that line as it was sold in early Oct., before meltdown in GGBs triggered by prospect of snap elections.
This time, it’s unlikely foreigners will roll over their complete exposure, leaving net supply to be taken down by Greek domestic institutions.
Together with fears that any net GTB supply to been absorbed by domestics will be a big challenge, this should trigger more pressure on Greece.
* * *
And speaking of April 9, that is the day that the country has told Eurozone officials it will officially run out of cash according to Reuters.
Coincidentally, it's also the day Tsipras will be in Moscow to discuss "international developments" with President Putin.
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What is this, like the 24th D-Day?
Yawn
Is the Greek government handing out survival kits to all the banks? Something tells me they'll need alot more than solar blankets and water purification tablets.
https://www.youtube.com/watch?v=jl7s4fsooPE
Throw the Greeks out of Europe already. What are we waiting for, they are and will be a basket case forever.
Which of these cylinders will have the bullet?
Eventually they all contain bullets.
They are going to "2 additional weeks" this to death.
If anyone seriously thinks the Greeks will leave needs their head checked.
And then it goes to collections, and wait till you see operation Repo go nuts in Greece.
i'm so fucking sick and tired of greek debt bullshit i could puke a banker out the top story right on merkels lap...
<-- FED rate hike
<-- Greek default
which comes first ?
first, ha kali dry, bone dry and paying big time for water...
The Hellenic kingdom was ruled by the Glucksburg family since 1832 and until 1973. Germany should annex Greece and install a German king again. Case solved. Debt absorbed.
http://en.wikipedia.org/wiki/List_of_kings_of_Greece
... But, but, but,... Greece is fix in 2010, no?! Greece is still problem!? Maybe Bail-In for Greek Tycoon is next step?
kick that fucking can AGAIN, brah!!!
They tried that with east Germany. They've been paying for it (in every sense) ever since. The sight of Tsipras rising in the Bundestag as new leader of Die Linke's partliamentary caucus wouldn't be completely worth it.
I personally remain convinced myself that the GDR faked its own death and Mutti, aka Comrade Erika, is still a deep-cover Stasi agent.
Notice that the GDR's leaders were only very lightly punished. Honecker died in bed in Chile, for example. I doubt Syriza will get such a sweet deal when the plug is pulled.
One interesting theory is - would a power like Russia/Soviet Union really just walk away from territories such as the GDR without leaving one of their own in a position of influence?
I've long suspected that Angela Merkel is at heart a product of the Soviet influenced GDR totalitarianism, and an agent of Russia/USSR.
Another D-day..., another last chance..., another "this is it, or else...?
<-- Fast N Furious movies
<-- Greek D-Days
which will end up the highest ?
The Greeks are quietly organizing to reestablish the original citystate system, true democracy without political parties. Details at alfeiospotamos.gr
(use Google translate). Switzerland is the closest modern state with an approximation of true citystate democracy based on the Cantons. They accepted this system as advised by John Kapodistrias who at the time was Russian foreign minister. He was from the island of Corfu.
Since 2011 there has been a custodial account with $600 Billion in US bonds, deposited for the "Hellenic Democracy" in the Bank of Montreal,
by a Mr Artemis Sorras who is behind the push for citystate rule. The politicians refuse to take the money because of 2 conditions:
1) That there will be an investigation by international experts into the causes of the tremendous debt.
2) If anyone, politicians on down is found to have profited from their position then they will face the justice system.
There are many other revelations by Mr Sorras regarding the role of the bankers (Rothschild) and their shenanigans since 1841 in Greece.
I'm so over Greece -
Somewhere in this soap opera Greece is gonna get thrown under the bus (and rushed to General Hospital no doubt), just don't want to miss that episode.
Yawn is right. It's all Bullshit!!! Greece will get to borrow this newly minted money so they can pay back some of the old borrowed money. This way all the EU banks can say "see, they are paying us back". That way they can hold all this worthless Greek debt at full value on their books. Nice gig if you can pull it off.
Blah blah blah... did someone cry "wolf"...
fucking default already.
the fEUdal lords will string this out longer than we live
yeah, great explanation. except that it has very little to do with reality. take another red pill. one that makes you remember The Vampire Squid Firmly Attached To The Face Of Humanity, and his role in this drama. or even just one that makes you remember all the articles that some BofAML analysts have written about all "things around the EUR" in the last years, and how much of them went the way they... wished for
What part of all fiat will die don't people understand? Life will go on, however.
same as it ever was, here's to that new Russian navy base in Greece!
and how many times do I have to repeat that never, in history, all fiat died... at the same time? your theory is fine, but it's a completely untested one
and it has little to do with the whole matter. way less then both sides try to make out of it
You mean just like "We've never had a decline in house prices on a nationwide basis"?
C'mon CDS...blow! BLOW!!!!
so, if they dont pay the IMF, the IMF will......cry? what power does the IMF have?
Read Perkin's "Confessions of an Economic Hitman".
This is just the economic powers perpetual farming operation.
A lot of shouting, then Germany and the ECB caves. Unless of course - Russia decides to get Greece out of prison. Then Greece might just give Europe the middle finger and finally push over the dominos.
So they will trade one tyranny for another? Why? Other than absolute desperation with their Drachma not being able to pay for food and medicine imports I could understand (perhaps). I guess someone is going to own them in the end either way - they did it to themselves though.
This time might be different. The Greeks are ripe to align with Russia, and Putin is ready to try and topple the dollar.
A Greek default and exit from the EU would trigger massive CDS carnige, might cause a fracture of the EU, and might crush the dollar.
It also might not, and after the World doesn't end Russia would be stuck with the over weight bitch of an ex-wife that only spends money and refuses to work.
Interesting times indeed, but I'll put my money on the US, EU and NATO.
Sheesh, I feel like I've read this headline 1 or 10 times over the past few years. Oh wait, I have... I hate fucking groundhog day.
I feel like I've read this headline 10 or 100 times..."
There..., I fixed it for you.., sheesh.
if you hate groundhog day, then groundhog day is your own personal hell. but the movie thought to embrace and love groundhog day
the movie rhymed with Sartre's No_Exit novel, with the famous misunderstood quip "Hell is other people"
Bill Murray called. He's demanding royalty payments from Greece for going well beyond "fair public use" of his movie.
Did they extend April Fools Day ???
Just think if you are a greek who gets a government check...I would run like hell to the nearest bank and cash that baby as soon as I get it...someday it will bounce......
I think D-Day is June 6th.
All the above calculations might be useless becaise befroe the 9th of April there is the 8 of April which is the day TSipras goes to see Putin . This is a wonderfull opportunity to Fu... up the EU of the coup d'etat and the colored revolutions . All the options are open including....... Russian bases in some Greek port !
amazing how this "Fuck the EU" comment of an American diplomat is still being... twisted like a bretzel. are you seriously attributing colour revolutions and coups d'etat to the EU? note that even Moscow is placing most of the blame elsewhere
meanwhile, Athens and Moscow are exploring options. like keeping Greece in the EU & eurozone while having a Greek-Russian alliance or understanding of sorts
@Ghordius As Nuland has shown the EU knew in advance of the coup d'etat and in fact Merkel and Co . Congratulated the plotters in Kiev . So the EU shares the responsibility for what happend .... it is not the First time that the idiots from Brussel get involved in crap like that . Remember Serbia and the old Jugoslavia .
whenever you remember Serbia... do you also remember how Bosniac Muslims and Kosovaran Albanians fared? just asking if you remember all sides in that conflict
"knowing" and "congratulating" ain't the same as "instigating", "planning" and... wait for it... "doing it"
and this without getting in the matter of a President fleeing the country, then frankly I'm bored by this incredibly one-sided way of looking at the thing
U.S.A. NGOs, funded to the tune of $5 billion USD, had no business rattling that hornets nest in Kiev on Putin's back porch, period.
Founding Fathers: "No foreign entanglements"
This is all about substantiating more NATO & MIC funding.
Get with the program..............and wake up.
Founding Fathers: "No foreign entanglements"
That was before the country was taken over by an entirely different people.
What?
Another Double Secret Probation for Greece?
What exactly do you have to do to get kicked out of Faber anyway?
Evvvvvery fucking day - some new financial armageddon. How much more interesting or promising life would have been for the average Greek citizen had Varafoukas not folded way back when - instead of every day now - some new variation on the same theme of financial retardedness. Like groundhog day, or, Breaking Bad. The shit show is NEVER going to end - at least that is what it seems. And that, if I were a Greek citizen, would drive me nuts.
we all here might die off before it blows
Yanis might soon be needing the services of whoever spirited Saul Goodman off to Nebraska.
Hope Danae likes Cinnabons.
This is going to be a financial bonanza for bankruptcy lawyers trilingual in English, German and Greek languages. Russian might also help
Koreans donated billions of euros' worth of gold jewelry to help pay down the nation's IMF debt in the wake of the 1997 Asian financial crisis - a debt Korea paid off ahead of schedule. Er... Greece... hello...?
The notion that one might give up precious family heirlooms to help the state to repay its debts would seem absurd for people in most countries. And yet many Koreans did just that - during the Asian financial crisis which brought the country to the brink of bankruptcy in 1997.
In South Korea, the national currency took a sudden dive, speculative bubbles burst, companies and banks collapsed under the weight of their debts, and millions of people lost their jobs during the course of the crisis.
"The government informed us in November 1997 through the media that we have a major financial problem and that we urgently need to borrow a lot of money," recalled Kyoung Sung-Suk, then a student and now a visiting professor of Korean studies at the University of Bonn.
Shortly thereafter, the International Monetary Fund (IMF) gave the green light to the biggest loan it had yet made: $58 billion (53.8 billion euros). The money had strict conditions attached to it: Interest rate hikes, fiscal austerity, and structural reforms. The unemployment rate quickly tripled as a result.
Heirlooms, wedding rings and gold medals
The Korean people tackled the crisis head-on. Starting in January 1998, the government asked the country's citizens to donate their gold jewelry to help repay the loan more quickly. Millions answered the call and went to special collection points to give the government what they could in heirlooms, wedding rings, or small gold figures, such as those traditionally presented in Korea on a child's first birthday. Athletes brought in gold medals and trophies.
"These things are connected with beautiful memories and very precious," said Sung. "My parents were among those who donated the gold jewelry they'd received as gifts on my first birthday." A friend's family, she said, donated the entire contents of their household jewelry showcase to the government's collection center.
The result was impressive. Within months, 227 tonnes of gold were collected, valued at more than $3 billion, according to a report in Hankyoreh newspaper. Voluntary action contributed to enabling Korea to repay its IMF loan ahead of schedule, after just three years.
An example for Athens?
Could the Korean example serve as a model for the heavily indebted Greek state? The situation is not quite the same, according to economist Rolf Langhammer, who was vice president of the Kiel Institute for the World Economy during the Asian crisis. Greece's current problem, in contrast to that of Korea in 1997, doesn't involve a shortage of foreign exchange reserves.
"But the core idea is quite right," said Langhammer. "We need to transfer funds from the private sector to the state, so the state can meet its obligations."
This could be done in several ways. "The best way is the normal route, namely via payment of taxes," said Langhammer. Another possibility would be for the Greek government to collect money from those of its citizens who have excess savings by selling them bonds.
In Japan, the latter is exactly the mechanism by which the government is funding its deficit. The fact that it is in debt to its own citizens, in a currency the government controls and creates, is the only reason Japan's enormous sovereign debt burden is sustainable.
However, there's a prerequisite for a government to be able to sell bonds to its citizens: Confidence in the state. "I doubt whether Greek citizens have that level of trust," said Langhammer. If they had, they would pay their taxes, and they wouldn't send so much money abroad every day.
The reform efforts in Greece are "a national challenge," said Langhammer. The country suffers from a large reciprocity gap between the citizens and the state: "Many people live from the state, but they aren't willing to supply the state the resources it needs in order to function. This is an age-old problem in Greece."
Nationalism and sense of community
The Korean academic, Dr. Sung, nevertheless doesn't consider it impossible that Greeks might sacrifice for their common cause. "If all the generations and classes living in Greece today were willing to pull together to solve the country's financial problem, they could do it, without outside help."
Dr. Sung attributes the willingness of her countrymen to donate private gold jewelry to the national government in an emergency to Koreans' powerful sense of community. "We always have had to solve our problems ourselves, as a country," says Sung.
She sees this as a consequence of the country's history and geography, surrounded as it is by much stronger powers such as China and Japan. As a result, a special "strength and power" developed, a strength steeped in nationalism.
The gold collection drive organized by the government during the Asian crisis wasn't the first of its kind. Ninety years ago, when Korea was under Japanese rule, citizens gathered gold jewelry to repay a loan to the colonial power.
A similar drive happened in Germany around the same time. During the First World War, citizens were asked to give jewelry to finance defense projects.
The collection campaign was organized under the motto "I gave gold for iron." The motto originated a hundred years earlier.
It dates from a similar collection drive during Prussia's war of liberation from Napoleon's Imperial France in 1813.
http://www.dw.de/koreans-gold-donations-a-model-for-greeks/a-18357224
WR;)
The Greeks don´t even pay taxes the way they have to and some stupid idiot talks about Greeks giving their gold and jewelry to their state? Greece is a failed state, always has been and ever will. Because the Greeks want it that way. And that´s why Greece has to be thrown out of the EU and the Euro already, because this is an union of modern, civilized states where a failed state like Greece has no place to be in.
So if Greece is so fucked up, why were they allowed/enticed to join the EU anyway? What is this modern union of civilized states you talk about because all I see is IMF, ECB, and EU sociopaths dictating the people be debt slaves to their New Feudal World Masters. (I didn't down vote you BTW).
Give up your gold to secure your central bank? Sure... hold your breath while I go get mine. I'll be back NEVER.
Hello China? This is Syriza calling!
Starting up the Greece bullshit again huh? So everyone will pretend they're quite worried for a while, then Greece gets another 6 month extension, then we can worry about another plane crash or something.
D day?..
Shit , i thought they joined russia like a few weeks ago or something? ..
This Greek crap has been going on for 5 years.
Yeah, everything was suposed to be fixed 5 years ago and always comes back needing more money.
Default already! This is getting real old.
Same with the rest of the PIIGS.
Clear all the debt by defaulting and be like Iceland.
Fuck the EU and butt fuck the GReeks!
Down bitch.
Greece defaulted in 2012.
It wasn't kicked out of the Eurozone then, and if Greece defaults in April 2015 I doubt that it will be kicked out of the Eurozone either.
Since all modern 'money' is just electronic numbers, how can the Greek Central Bank ever run out of money? As long as the keyboard works, they can just type in what they need - and hide the accounting trail later.
April 9th is a Thursday, not a Friday.
"After 1 month, the Managing Director notifies the Executive Board that an obligation is overdue.
It is once the Executive Board has been notified of the missed payment that a critical sequence of events could unfold."
A month? Surely the whole world (and more to the point financial markets and the brave souls who still have money in Greek banks) will know in a matter of minutes!
I hope they are ready for lots of calls from payment collectors around dinner time!
"Don't pick it up, Danae. Just give me the rest of the bottle, would you?"
Pay your bills, deadbeats. Or just sell Goldman some more of your islands. That'll work too.
Yet another Greek D-Day. Mark my words, the can will be kicked down the road again, And again after that.