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

Tyler Durden's picture


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.

More from Bloomberg:

There are still obstacles to concluding what negotiators term a “consensual restructuring.” Official lenders may object if they conclude that the deal would be too expensive for Greece, which would force the country to go back for more official support in the future.


“I can only tell you the negotiations are continuing,” said Frank Vogl, an IIF spokesman. “I can’t tell you whether they’ll be successful.” The IIF, a global association of financial institutions, is led by Deutsche Bank AG (DBK) CEO Josef Ackermann.


An agreement reached Oct. 26 called for private holders of just more than 200 billion euros worth of Greek government bonds to accept new bonds with a face value of half that amount, or about 100 billion euros. As part of the deal, euro-zone members agreed to kick in 30 billion euros in unspecified support. That could take the form of buying bonds from the private holders at 100 cents on the euro in cash, leaving them with new bonds with a face value of 70 billion euros.


Negotiations since then have centered on the interest rate new bonds will pay, with Germany among those insisting on a low rate and the private creditors demanding a higher one.


The new bonds will probably pay annual interest of 4 percent to 5 percent and have a maturity of 20 years to 30 years, Richards said. They may trade for about half of their face value, he predicted. Altogether, the net present value of the deal for the bondholders will be about 32 cents on the euro, he estimated.


It’s not yet clear whether the deal will cover all outstanding Greek bonds or just those maturing by the end of 2020, Richards said. He also said that the deal probably won’t contain a sweetener to reward creditors in case of a strong improvement in the health of the Greek economy in coming years.


The tentative deal may win support from investors holding 70 percent to 80 percent of the privately held Greek bonds, he estimated. He favors the deal, suggesting investors who refuse may get back less.


“There’s a very, very high probability that this goes through,” he said. “It’s the best deal creditors can get.”

Well as long as Marathon is talking for all the possible hold outs...

Finally, assuming this deal does go through, we can't wait for Greek people (and thus US taxpayers who are ultimately funding all of this) to understand they are giving hedge funds an immediate 28% return (bonds trading at 25 cents, recovery is 32) which they themselves are funding. On the other hand 7 cents nuisance value on $200 billion is $14 billion. As a reminder, on January 10th we said "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." In other words, we were almost spot on where we said Europe (and thus America) would "tip" hedge funds to just go away.


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Tue, 01/17/2012 - 17:23 | 2072303 Fips_OnTheSpot
Fips_OnTheSpot's picture

Call in ISDA (just for fun...)

Tue, 01/17/2012 - 17:34 | 2072353 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

How long is it going to take these european leaders to get round the table and address the situation?! It infuriates me, their impotence, lack of coordination! Do they realise the gravity of the situation? All parliaments should be suspended, central banks should send representatives and a supercommitee must be formed. Greece must function, be seen to be functioning; they must be given the opportunity to do so by the germans, dutch, and austrians. For the love of God! Imagine the US, if one state is in trouble the others help! Thats what europe needs right now - not this dilly dallying! Get together and sort out a package! Otherwise standards of living will plummet in southern countries and the north will be left too strong. We knw what that lead to last time; I say unless you want to see another Hitler you support greater centralisation of power and coordination between politicians chosen by the finanical sector.

Tue, 01/17/2012 - 17:40 | 2072375 redpill
redpill's picture

MDB is that you?

Tue, 01/17/2012 - 17:47 | 2072401 VanillAnalyst
VanillAnalyst's picture

Just reviewed my GGB CDS contract wording...... apparently 'Credit Event,' means the day Greece starts running those "For just a dollar a day you can feed a hungry Greek," commercials at 3 a.m.

......humph....... guess I should have read the dam thing before I signed it. Oh wellz.


-J Corzine

Tue, 01/17/2012 - 18:21 | 2072504 nope-1004
nope-1004's picture

Three years of endless different monthly iterations of how to spell:

B - R - O - K - E

Getting tiresome, but I find Greek humor still amusing, nonetheless.


Tue, 01/17/2012 - 18:48 | 2072590 FMR Bankster
FMR Bankster's picture

It is some funny stuff. All these people are wasting time negotiating. Greece will never pay ANYONE ANYTHING they don't get from a third party. All they want is some sort of agreement that will lead to the advance of EVEN MORE OF SOMEONE ELSES MONEY so they can spend it. That way the citizens of Greece won't string the politicians up from lamp posts. (yet)

Tue, 01/17/2012 - 19:55 | 2072750 The Big Ching-aso
The Big Ching-aso's picture



Sooner or later this scrumptious Greek salad of Bullshit, Kakamatas, Fetid cheeze,  and sprinkled ChinNuts with Piss Vinagarette, is gonna be served whether they like it or not.

Tue, 01/17/2012 - 17:44 | 2072391 Hippocratic Oaf
Hippocratic Oaf's picture

I was expecting around 25 cents. But it aint done 'til it's done.

Tue, 01/17/2012 - 18:32 | 2072535 traderjoe
traderjoe's picture

Remember when that Fucktard Leo said Greek bonds were a screaming buy at 8% yields?! Bwhahahahaha...

Tue, 01/17/2012 - 22:56 | 2073202 Not A Monetarist
Not A Monetarist's picture

You are a psycho.  Let's get rid of any form of democracy so we can have the financial sector, who got us into this mess, have total political and economic control of the world with no checks at all! Now that's just crazy.

Tue, 01/17/2012 - 17:34 | 2072354 LetThemEatRand
LetThemEatRand's picture

Nah, a 2/3 haircut is not a technical default in the land of make believe.

Tue, 01/17/2012 - 17:37 | 2072363 redpill
redpill's picture

It's not default, it's voluntary, remember? (as if there is a choice)  It's a late Christmas present to the Greek people from all the kind bondholders.  But a credit event?  No no no, how can anyone be so crude as to suggest such a thing.

Tue, 01/17/2012 - 17:58 | 2072436 HoofHearted
HoofHearted's picture

The Bloomberg piece used the term consensual. Consensual usually gets used when something else is taking place. Oh I see the link. Trust me ISDA officer, that privaty equity outfit was asking for it. It was consensual...

Tue, 01/17/2012 - 18:11 | 2072480 catacl1sm
catacl1sm's picture

If it didn't want it, then it wouldn't have dressed all sexy.

Tue, 01/17/2012 - 17:46 | 2072382 Doña K
Doña K's picture

Dear Greeks:

Let some heads roll and then do yourselves a favor and default or better yet add insult to injury and offer 2 pennies to the euro, as this is the only way to salvation. Monitor future government spending not to exceed receipts.

Do away with all politicians selling you down the river.

Tue, 01/17/2012 - 18:01 | 2072443 AlaricBalth
AlaricBalth's picture

FROM THE ISDA: January 16, 2012

Greek Sovereign Debt Q&A
The following are responses to the most frequently-asked questions that ISDA has received in
connection with the application of credit derivatives to a potential restructuring or reprofiling
of Greek sovereign debt. The following does not constitute legal advice, and is
subject in all respects to any determination that the ISDA EMEA Credit Derivatives
Determinations Committee may make in relation to CDS referencing the Hellenic Republic


The possibility of retrospectively applying Collective Action Clauses (CACs) to existing
Greek debt has been discussed of late. Would the inclusion or activation of a CAC
trigger a Credit Event?

The determination of whether any action constitutes a credit event under CDS documentation
will be made by ISDA’s EMEA Determinations Committee on the basis of the specific facts
and if a market participant requests a decision from the DC. Generally, however, the
inclusion of a CAC would not, in and of itself, be expected to trigger a Credit Event. On the
other hand, the use of such a clause to effect a reduction in coupon or principal or one of the
other events set out in the definition of the Restructuring Credit Event could trigger if the
other requirements of the Restructuring Credit Event were met (for example decline in
creditworthiness), as its effect would be to bind all holders of the relevant debt.

Tue, 01/17/2012 - 21:00 | 2072878 bnbdnb
bnbdnb's picture

Well, if it doesn't trigger a CDS, does that mean the purchaser gets their CDS insurance money refunded?

Tue, 01/17/2012 - 17:22 | 2072304 Joebloinvestor
Joebloinvestor's picture


How long before this RUMOR blows up?


Tue, 01/17/2012 - 17:47 | 2072400 SheepDog-One
SheepDog-One's picture

Before tomorrows open?

Tue, 01/17/2012 - 17:24 | 2072306 JamesBond
JamesBond's picture

rumormill bitchez

find a blade and sit on it.


Tue, 01/17/2012 - 17:38 | 2072368 SheepDog-One
SheepDog-One's picture

Im waiting for the next rumor within hours that Europe is about to do a $20 Trillion bailout for the banks, got to up todays $10 Trillion rumor, and yesterdays measely $2 Trillion rumor.

Tue, 01/17/2012 - 18:13 | 2072487 Caviar Emptor
Caviar Emptor's picture

Bullish for mushroom clouds

Tue, 01/17/2012 - 17:23 | 2072307 The Swedish Chef
The Swedish Chef's picture

BULLISH!!! Unless, of course, you lent the failed Greek government some money...

Tue, 01/17/2012 - 17:24 | 2072310 surf0766
surf0766's picture


Tue, 01/17/2012 - 17:24 | 2072311 Black Forest
Black Forest's picture

would give creditors 32 cents per euro

Excellent deal. My deepest respect.

Tue, 01/17/2012 - 17:24 | 2072312 howswave5workin...
howswave5workingforyou's picture

wow. what debt/gdp does that leave Greece at? better off cutting deep to try and get closer to debt sustainability. 

Tue, 01/17/2012 - 17:26 | 2072315 Cdad
Cdad's picture

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 effective create the perception that the deal was coercive.

Is there anyone out there that does not already KNOW that this will happen?  This is purely the case of spinning something disasterous as good.

Just a joke.  Let the CDS wars begin already.

Tue, 01/17/2012 - 17:28 | 2072326 Boilermaker
Boilermaker's picture

You know that SOMEHOW, 31.5 cents would have constituted a 'CREDIT EVENT'.

How is this bullshit going to be spun?

Tue, 01/17/2012 - 17:31 | 2072341 Cdad
Cdad's picture

So far, the criminal syndicate known as Wall Street is simply going with the spin strategy of "Priced in."

There.  Apocalypse averted.  See how easy it is in central planning land?

Tue, 01/17/2012 - 17:42 | 2072386 SheepDog-One
SheepDog-One's picture

Besides that, hell we got $20 Trillion free Euros comin! 

Party time!

Tue, 01/17/2012 - 17:29 | 2072330 yogibear
yogibear's picture

Where's a good Warren Buffet rumor when you need it? 


How about sightings of PLOUTOS (or Plutus), the Greek god of wealth from within Greece?

Tue, 01/17/2012 - 17:31 | 2072338 Zoltan
Zoltan's picture

Marathon Asset Management cited on BNN supporting this story.


Tue, 01/17/2012 - 17:32 | 2072342 falak pema
falak pema's picture

ha, ha ha, 32% recovery is 68% write down; so much for the HFs saying they had Greece and Euro by the short hairs; correct me if I'm wrong!

Tue, 01/17/2012 - 17:33 | 2072350 Tyler Durden
Tyler Durden's picture

Greek bonds cost 25 cents. They get 32 cents. 28% recovery, although assuming one holds the post-reorg paper thru maturity, which for a Greece that will have almost no debt should be feasible.

Yup. They did.

Tue, 01/17/2012 - 17:35 | 2072357 SheepDog-One
SheepDog-One's picture

OH I get it now and it makes more sense, everyone gets a 130% recovery on their failed Greek bonds....spectacular!

Tue, 01/17/2012 - 17:37 | 2072365 LawsofPhysics
LawsofPhysics's picture

So essentially, Greece already defaulted, no CDS triggered and this is the "New Deal" for Greece.

Do I have this right Tyler?

Tue, 01/17/2012 - 17:44 | 2072395 redpill
redpill's picture

Makes one wonder just what a sovereign has to do to trigger a CDS if this doesn't qualify.  What is even the point of sovereign CDS is they can just pretend defaults don't exist?

Tue, 01/17/2012 - 17:59 | 2072434 LawsofPhysics
LawsofPhysics's picture

This is extremely bullish.  Although I certainly would not want to be an attorney for one of the banks that sold that debt to the HF boys.

Tue, 01/17/2012 - 18:35 | 2072546 Calmyourself
Calmyourself's picture

Hmm, I think I may have posted somrthing about no rules, no regulators, no triggers to calamity with the exception of hunger..  Contracts mean nothing in this brave new world didn't MF Global teach you all anything?

Tue, 01/17/2012 - 19:24 | 2072685 DosZap
DosZap's picture


Well if it hasn't, it should.

I forsee (at least here), a ZH mini bank run,all paper contracts avoided unless Lawyered UP.And removal of oneself from ANY legal docs,contracts,investments,deposits not prepared by yourself.

It's become patently obvious paper agreements will most likely get you GREASED

Cash,PM's,and barter goods, and a good man cave.(Well hidden)

Tue, 01/17/2012 - 21:44 | 2072983 Calmyourself
Calmyourself's picture

My middle name; Prepare youself, last name; Defend yourself, physically, financially, spiritually.. Mom was a bit of a hippie..

Tue, 01/17/2012 - 17:44 | 2072369 falak pema
falak pema's picture

wow, and that is on what value of portfolio??? The recalcitrant HFs hold how much? Or is this accross the board for ALL bond holders, not just the HFs?

The least these HF managers can do is spend the rest of their lives spending vacations in greece to say thank you to the country who paid them so handsomely!!

Saba, Aba and baba; went to Greece in a bonded boat, Aba drowned but Saba made out good!

Tue, 01/17/2012 - 17:32 | 2072343 SheepDog-One
SheepDog-One's picture

Shouldnt Greek debt holders be like GS and recover 105%??

Tue, 01/17/2012 - 17:32 | 2072344 Pancho Villa
Pancho Villa's picture

Excellent! I exchange my Greek bonds for new ones at 32% of their initial value. And then I wait for Greece to default on those new bonds.

Tue, 01/17/2012 - 17:32 | 2072345 howswave5workin...
howswave5workingforyou's picture

most banks have marked these down considerably. the outstanding nominal value is 8bn euro. this is very bullish for the Greek economy. bring on the euro weakness. will help the exporters. 

Tue, 01/17/2012 - 17:34 | 2072346 PaperBear
PaperBear's picture

To use Jim Willie's analogy, your building has only had 2/3 of it destroyd by fire but it's still not a fire for the purposes of your insurance policy. These Credit Default Swaps are contracts that are not really a contracts - f**king, f**king, f**king, f**king really dumb.

Tue, 01/17/2012 - 17:39 | 2072348 AlaricBalth
AlaricBalth's picture

Legal Aspects of the Greek Debt Stock

Governing law. From the legal standpoint, the salient feature of
Greece’s bond debt is that approximately 90% of the total is governed by
Greek law. Only about 25 billion of the bond debt was issued under the law
of another jurisdiction, and most of that under English law.

Collective action clauses.

It does not appear from a survey of Greek bond documentation that the instruments issued under local law  contain provisions permitting the holders to amend the terms of the bondsafter issuance (other than to correct obvious errors or technical matters).Prior to 2004, Greek bonds issued under English law contained collective action clauses (“CACs”) that appear to permit holders of 66 percent of an issue to modify payment terms in a manner that would bind all other holders.After 2004, Greece altered this clause in its English law bonds. This new version of the CAC permits amendments to payment terms of a bond, as well as certain other key features of the instrument, with the consent of holders of 75% or more of an issue. Some version of a collective action clause appears in most of Greece’s foreign law-governed bonds. There is no reason not to use these clauses to minimize the number of non-participating creditors. It would work as follows: each tender of an existing bond containing a CAC would contain a power of attorney from the owner of that bond in favor of the government (or its exchange agent) to vote that bond at a bondholders’ meeting (or in a written action by bondholders) in favor of a resolution that, if approved by the requisite supermajority of holders of that instrument, would either cause the totality of that bond to be tendered in the exchange or cause the payment terms of the bond to be amended so as to match the terms of one of the new instruments being offered in the exchange. Such a resolution, if approved by the requisite supermajority of holders (66% or 75% in Greek bonds governed by English law) would automatically bind all holders.

Tue, 01/17/2012 - 18:08 | 2072474 Captain Kink
Captain Kink's picture

You answered an important question that was bugging me.  Thank you.

Tue, 01/17/2012 - 17:43 | 2072351 Mercury
Mercury's picture default here?

Privately held Greek debt hedged with CDS must be a rare thing by now.

Why would you agree to collect 32c per Euro when your CDS would pay 100 ?

Tue, 01/17/2012 - 17:44 | 2072390 SilverIsKing
SilverIsKing's picture

Why agree?

Because it's a deal they can't refuse. Youz know what I mean?

Tue, 01/17/2012 - 17:54 | 2072419 Mercury
Mercury's picture

That and it probably says something about who was writing that CDS.

Bet you thought writing insurance on Greek Sovereign debt was pretty risky huh?

Tue, 01/17/2012 - 18:00 | 2072440 stocktivity
stocktivity's picture

No risk for the banks when Benny has their backside covered

Tue, 01/17/2012 - 17:54 | 2072424 supafuckinmingster
supafuckinmingster's picture

"Why would you agree to collect 32c per Euro when your CDS would pay 100 ?"


Because everyone and their fucking cats knows that CDS won't pay. Credit event? My arse!!

Tue, 01/17/2012 - 18:00 | 2072439 NEOSERF
NEOSERF's picture

Real question is why you would purchase CDS on any of the PIIGS knowing this sham of a default won't be allowed to be defined as non-voluntary.  Thus if no one is willing to buy CDS on the PIIGS, they also can't buy bonds of the PIIGS...this EU collapse really should be in the 8th inning now instead of the 4th.

Tue, 01/17/2012 - 20:17 | 2072792 Excursionist
Excursionist's picture

An investor who's been long GGB + CDS will have taken mark-to-market hits on the GGB principal and gains on the CDS (assuming a long(er)-term holder).  Margin variations are settled daily, so the CDS gains are a bird in hand.  Someone willing to accept 32% of face is telling you that his present value of [ GGB principal losses + CDS gains + 32% of face ] > present value of [ amount recovered from Greek gov't + CDS gains after a credit event trigger - a cornucopia of risks (e.g., ISDA determination, counterparty solvency) ].  Said cornucopia is not immaterial.

Tue, 01/17/2012 - 17:39 | 2072364 anonnn
anonnn's picture

A real explanation [my emphasis added]:

...What was this [[[2005]]] ammendment? The ammendment exempted repos (and hypothecated and re-hypothecated assets) and a whole range of derivatives from the automatic stay [[[imposed at bankruptcy; which means all the assets left in a company at the moment it goes bankrupt are protected from the rush of creditor’s demands ]]]. It also allowed lower quality assets to qualify for the exemptions   .

Which means,

The special bankruptcy treatment given repos and derivatives means that repo lenders and parties to derivative contracts can keep the collateral if their trading partner becomes insolvent . This exempts them from the "automatic stay" rule in bankruptcy, which prohibits most creditors from trying to collect ahead of others.

Or as the official report from the US Financial Crisis Inquirey Commission said,

under a 2005 amendment to the bankruptcy laws, derivatives counterparties were given the advantage over other creditors of being able to immediately terminate their contracts and seize collateral at the time of bankruptcy. (p. 48)

So when a bank goes bankrupt, BEFORE even the most senior bond holders, the repo lenders and derivatives traders can remove, or keep all the assets pledged to them.

This amendment which was touted as necessary to reduce systemic risk in financial bankruptcies also allowed a whole range of far riskier assets to be used, making them too immune from the automatic stay in the event of bankruptcy. Which meant traders flocked to a market where risky assets would be traded and used as collateral without apparent risk to the lender. The size of the repo market hugely increased and

riskier assets were gladly accepted as collateral because traders saw that if the person they had lent to went down they could get your money back before anyone else and no one could stop them.

It also did one other thing. Because the repo and derivatives traders ran no risk – they could get their money out of a failing bank before anyone else, it meant they had no reason at all to try to stop a bank from going under. Quite the opposite.

All other creditors – bond holders – risk losing some of their money in a bankruptcy. So they have a reason to want to avoid bankruptcy of a trading partner. Not so the repo and derivatives partners. They would now be best served by looting the company – perfectly legally – as soon as trouble seemed likely. In fact the repo and derivatives traders could push a bank that owed them money over into bankruptcy when it most suited them as creditors. When, for example, they might be in need of a bit of cash themselves to meet a few pressing creditors of their own.

The collapse of both Bear Stearns, Lehman Brothers and AIG were all directly because repo and derivatives partners of those instituions suddenly stoppped trading and ‘looted’ them instead. ..."


Read whole explanation at

Tue, 01/17/2012 - 17:39 | 2072373 Flesh Wound
Flesh Wound's picture

Are we still talking about Greece? Lets move on people plenty of Other European countries about to cause trouble.

Tue, 01/17/2012 - 18:26 | 2072519 reload
reload's picture

Portugal will be first in line at the 68pct debt reduction window. Their finance minister said on the BBC last year that, for now portugal was going to oxide by it's obligations-but that if Greece was offered debt relief they would seek it too. I can't find a link but it was in november on the BBC newsnight program

Tue, 01/17/2012 - 18:36 | 2072552 Rainman
Tue, 01/17/2012 - 17:40 | 2072380 Flakmeister
Flakmeister's picture

Sovereign debt CDSs are like the variation of Russian Roulette played in The Deer Hunter...

Never should have existed and should be made illegal... with the proviso that existing premium payments be reversed until the original purchaser is made whole...

Fucking side-bets that cannot be paid off and serve no useful financial purpose...

If you don't like the paper.... don't buy it... 

Tue, 01/17/2012 - 17:41 | 2072381 apu123
apu123's picture

They can only use the "priced in" mantra until companies start reporting really poor earnings, economic data points continue to decay and inflation starts to really bite.  At that point they will have to totally fake their numbers and companies will have flat out just make up earnings.  Maybe people will not fall for it at that point?  I have taken some solace in the fact that the market did not have a rip-fest on some of the previous unemployment reports that were massaged to reflect an upside surprise.  Maybe some people are waking up to the fact that numbers are fudged?  George Carlin said "Think of how stupid the average person is and then realize that half of them are stupider than that." so I don't know.

Tue, 01/17/2012 - 17:42 | 2072385 youngman
youngman's picture

This will be the first revision...they will come back in a year or two....oh and they are on strike call them in the morning....late morning..lots of Ouzo tonight celebrating I am sure..

Tue, 01/17/2012 - 17:44 | 2072392 Dr. Engali
Dr. Engali's picture

32 cents on the Euro. Sounds like they are getting over paid.

Tue, 01/17/2012 - 17:46 | 2072397 junkyardjack
junkyardjack's picture

At least its Voluntary... 

Tue, 01/17/2012 - 17:46 | 2072399 surf0766
surf0766's picture

If there are no triggering credit events ever... what happens? Rates explode?

Tue, 01/17/2012 - 17:48 | 2072404 bob_dabolina
bob_dabolina's picture

I heard it was suppose to be an @ par recovery. I know a guy, who knows a guy, who told me. They have this all figured out behind the scenes. No biggy.

Tue, 01/17/2012 - 17:49 | 2072406 kito
kito's picture

whats the point of liposuction if you keep eating like a pig...........

Tue, 01/17/2012 - 18:04 | 2072456 stocktivity
stocktivity's picture

Because for a few weeks you could wear new clothes and act you're in good shape for your age.

Tue, 01/17/2012 - 19:10 | 2072650 kito
kito's picture

sorry, that should read...eating like a piig.....

Tue, 01/17/2012 - 17:50 | 2072407 buckethead
buckethead's picture

Having trouble following what's being said. Google not providing much help.

Would appreciate a translation of the main points in laymans terms.

Is Greece (insolvent) offering hedgies a payoff to divest? Offering haircuts whereas something is better than nothing?

I see 25 cents, 32 cents and one €. Bond costs $.25 pays $.32?

Seems a no brained. But if bond costs €1 and returns 32% ( this seems like the case) not very enticing.

Sorry to show my ignorance.

Inappropriate? Junk away!

Tue, 01/17/2012 - 18:06 | 2072410 falak pema
falak pema's picture

If I undersand this deal; Greece won relative to the initial deal as the write down is now 68% and not 50% as initially; but the smart aleck HFs who bought the panicky debt from private banks at 25 make out like kings as they hold the "subordination" gun to Greek government temple. It takes balls to make that call; so they win and Greece wins also. Its the other banks who lost out and sold at 25 to the HFs. THAT WILL BE THE OFFICIAL LINE. Right TD? This is all a little greek poker five card stud play in 4Q 2011 !


I wouldn't be AT ALL surpRIsed that the Greek Oligarchs found these HFs based in London and set up the deal with them BEFOREHAND, at the expense of the major banks who had panicked, knowing the seeming chaos in government circles. WHeels within wheels....that's hi finance for u and its typical of CIty shenanigans, where all those Greek Oligarchs have their buddies in hide outs.

Merkel is right, you can't trust this Greek corrupt Mafia elite further than you can throw a horse shoe.

Tue, 01/17/2012 - 20:42 | 2072847 buckethead
buckethead's picture

Thanks for the analysis. I can understand that.


Am I wrong in cheering for the hedgies and Greece in this case?

Tue, 01/17/2012 - 17:52 | 2072417 tradebot
tradebot's picture

It blows up when they say it blows up and not before!  Remember the schedule!

Tue, 01/17/2012 - 20:33 | 2072820 UP Forester
UP Forester's picture


"Handle all the way up?"

"Yeah, boss!  Wires are in place, also!"

"Put in your earplugs, boys!"

Tue, 01/17/2012 - 17:57 | 2072432 NEOSERF
NEOSERF's picture

What I'd like to see is a chart with the bagholders, I mean bondholders holdings of these bonds and exactly how much of a hit to their value they will take at 50%, 66%, 75% or 90%...which ones won't survive and thus trigger other CDS issues that really gets this party started

Tue, 01/17/2012 - 17:59 | 2072438 q99x2
q99x2's picture

'expect various ad hoc splinter "committees" to emerge'

Correction: "expect various ad hoc sphincter "committees" to emerge"

Tue, 01/17/2012 - 18:06 | 2072460 Lord Welligton
Lord Welligton's picture

This is pure shit.

Greece is the laxative that will make the Euro run like it should.



Tue, 01/17/2012 - 18:07 | 2072468 youngman
youngman's picture

There will be no no CDS payments...that is number one in this game....cause if there is....the whole world fails....TPTB know this...the casino is to big now...Ben Bernanke will buy all of Greeces debt if he has too...just to make sure there is no CDS event...I would bet everything I own on this little item....this is a rigged game boys and girls...and this time..the house wins all the CDS default....

Tue, 01/17/2012 - 18:20 | 2072507 Lord Welligton
Lord Welligton's picture

And that is why the "hold-outs" are "holding-out".

They are players.

The FED/ECB know that the hold-outs are holding out.

The Hold-Outs know that the FED/ECB know that they know.

The game as you say is to make sure there is no credit event.

One problem.

Greece is not the only problem.

An event will happen.

The trigger is unknown.


Tue, 01/17/2012 - 18:25 | 2072508 falak pema
falak pema's picture

no CDS default, as this was probably a set up deal. Those HFs made 7 cents on 25 cents invested. Greece got a 68% write down. And the banks lost out at 25% on Greece but will win on all the others; whew, what a convoluted world this is!

No CDS on any future write downs if Portugal goes Greek! This has created a precedence and Euro sovereigns are off the hook. They will rinse and repeat. Maybe use the same HF as surrogates. What a mad, sad world. That's Hi-finance! The show must go on!

The banks lose but they get repaid by the back door ECB deal and LTRO. 

Tue, 01/17/2012 - 18:32 | 2072537 Lord Welligton
Lord Welligton's picture

No CDS on any future write downs if Portugal goes Greek!

The Sovereign CDS market should be dead. Is it?

Why would anyone buy CDS now?

Is this the unwind of the CDS time bomb by Central Banks?

The banks lose but they get repaid by the back door ECB deal and LTRO. 


The Central Banks lend to their associates at 0%.

The public get to pay through the magic of inflation and interest rates.

The rich get richer and get to laugh at the peasants.

Tue, 01/17/2012 - 18:11 | 2072483 CrashisOptimistic
CrashisOptimistic's picture

This does happen to mean that Greece remains in the EU to drag down the value of the Euro.

Tue, 01/17/2012 - 18:16 | 2072497 Pancho Villa
Pancho Villa's picture

One should be a little wary of unconfirmed reports of agreements by interested parties.

For instance, Jim Fisk and Jay Gould tried to create a massive gold short squeeze in 1869. Rumors that the US gov. might start selling gold caused the price of gold to start declining. Jay Gould met with Pres. Grant to try to convince him not to sell US gov. gold. Grant agreed to nothing. But Jay Gould came out of the meeting and claimed that Grant had agreed not to sell any gold, causing the price of gold to shoot up again. Gould used this as an opportunity to liquidate his gold positions at a huge profit.

No reason to believe that this is happening here. Just saying: beware of spin.


Tue, 01/17/2012 - 18:20 | 2072503 Cole Younger
Cole Younger's picture

I take it the PIIS (PIIS because the greek bailout takes "g" out of the term) will want the same deal..correct?

Tue, 01/17/2012 - 18:24 | 2072514 Lord Welligton
Lord Welligton's picture

Where I'm from it's called taking the piss.

Tue, 01/17/2012 - 18:22 | 2072509 The Count
The Count's picture

I am soooo sick of hearing one lunatic bailout concept after the next. Just let that bitch go under aleady! And if the entire EU has to break apart, so f*cking be it. 




Tue, 01/17/2012 - 18:23 | 2072512 navy62802
navy62802's picture

Time to sell the Parthenon!!

Tue, 01/17/2012 - 18:26 | 2072518 luna_man
luna_man's picture



Analyze, if you must...Still, Doom and Gloom.

Double check that preparedness, list.  Leave anything out? 

Tue, 01/17/2012 - 18:31 | 2072533 navy62802
navy62802's picture

I should probably add condoms.

Tue, 01/17/2012 - 18:39 | 2072564 ejhickey
ejhickey's picture

would a 100% haircut be considered a default?

Tue, 01/17/2012 - 18:42 | 2072570 Lord Welligton
Lord Welligton's picture

Apparently not.

Welcome to Utopia.

Tue, 01/17/2012 - 19:01 | 2072626 DosZap
DosZap's picture

In a nutshell, Greece gets a

Tue, 01/17/2012 - 19:20 | 2072675 howswave5workin...
howswave5workingforyou's picture

speedy recovery Greece. hopefully we will see some relief for the homeless children/orphanages in Greece. those scenes have been horrific. nobody likes to see such severe poverty.

i have no sympathy for the foreign banks that lent money to Greeks that suffered a loss. hedge funds live and die by the sword with their client/own money, they don't receive any taxpayer money direct for their mistakes. greek politicians/tax dodgers should be ashamed of themselves and the hardship they have the brought their country. for investment banks that profited on asset swaps to hide government debt levels. it is criminal, unethical and beyond the principals that any of these organizations were supposedly found on. 

good to see some proper analysis in the commentary section. better than the typical "die Euro bitchez". scary to think such idiots participate in capital markets. 

lets see what tomorrow brings. 

Tue, 01/17/2012 - 20:08 | 2072776 LawsofPhysics
LawsofPhysics's picture

"lets see what tomorrow brings."

Indeed.  Lots of poverty in Portugal, Ireland, Italy, and Spain.  If I were Ireland in particular, I would sure as hell be looking to re-negotiate.

Tue, 01/17/2012 - 19:28 | 2072696 howswave5workin...
howswave5workingforyou's picture

the other peripheral countries are not a sustainable debt path. this may set a precedent for other countries. ultimately debt forgiveness/restructuring is required for ireland, greece, portugal. spain seems to be a function of the cajas banks/property market. italy has a reform/growth problem. very limited private debt. the outliers once the GIPSI have been dealt with will be US/Japan. however, the US does have the means to grow its way out. lets not forget Iraq added $1trillion to the national debt?

Tue, 01/17/2012 - 20:38 | 2072836 Money 4 Nothing
Money 4 Nothing's picture

Greek default tellegraphed:

Tue, 01/17/2012 - 22:55 | 2073191 Buck Johnson
Buck Johnson's picture

"The tentative deal may win support from investors holding 70 percent to 80 percent of the privately held Greek bonds, he estimated. He favors the deal, suggesting investors who refuse may get back less.  “There’s a very, very high probability that this goes through,” he said. “It’s the best deal creditors can get.” "

So investors who refuse may get back less.  If I was an investor I would say F it and go to my insurance to pay up because this is a credit event.  They are gaming the system again and this time it won't work, even the investors investors will be screaming we won't take a 68% cut no matter what.

Wed, 01/18/2012 - 05:32 | 2073729 theprofromdover
theprofromdover's picture

$18.5 billion required on 20 March?

Do you seriously believe that there aren't a whole queue of oily men from Wall St sitting outside Hopodopolopolus's door with their nefarious schemes to conjure up the money (err with no strings attached)?

This is not over; won't be over till the pensions have all been stolen and the citizens are at the soup kitchens. If Super-Mario can even be rumored to be thinking -at all- of printing 3 trillion, that should tell you something.d

Because who or what is going to stop them.

Wed, 01/18/2012 - 05:33 | 2073730 David Janssen
David Janssen's picture


I have a question: when we're talking about a 68 % haircut; how should I interpret this? Does this haircut include both coupon and principal payments? And would that mean that we take the notional amounts (for principals and coupons) and then simply pay 32 % of these?

Also, does that mean that this will happen in an equal way for bonds with various maturities? In that case it seems that the loss for a 5-year bondholder (priced at around 56 % of the original face value) would be larger than the loss for a 10-year bondholder (priced at around 33 % of the original face value). In fact, it seems that the latter is hardly experiencing any loss, 67 of the 68 % haircut is already priced in. Am I right in my understanding?


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