Spanish bond yields have hit an unsustainable 7%, ie they have become junk.
It is as though the "bailout" of last Sunday never occurred!
It is as though the "bailout" of last Sunday never occurred!
Showing posts with label bonds. Show all posts
Showing posts with label bonds. Show all posts
Thursday, June 14, 2012
Thursday, April 5, 2012
Greece's Ever Flexible "Deadline"
On 2nd April I wrote the following:
Today Greece has announced that it has indeed postponed the deadline for remaining bondholders to accept a debt swap, the new "deadline" is 20th April.
Ever flexible "deadlines" are the tools of fools, conmen and dreamers.
"Oh, that's easy, Greece has yet again postponed the "deadline" (from 4th April) to 18 April!"Well I was a little ahead of events, and was two days out on the the date.
Today Greece has announced that it has indeed postponed the deadline for remaining bondholders to accept a debt swap, the new "deadline" is 20th April.
Ever flexible "deadlines" are the tools of fools, conmen and dreamers.
Saturday, March 31, 2012
Greek Bonds Worthless
The Bundesbank announced yesterday that it will refuse to accept Greek, Irish or Portuguese sovereign/bank bonds; ie it will cease to lend to commercial banks that use Greek, Irish or Portuguese bonds as collateral. As ekathimerini points out:
It is now only a matter of time before Greece, and other peripheral nations, leave or are kicked out of the Eurozone.
"It also means that the credibility of the new bonds issued is no different to that of the old ones they have replaced."This effectively kills the European peripheral bond market and, by definition, the current structure of the Eurozone.
It is now only a matter of time before Greece, and other peripheral nations, leave or are kicked out of the Eurozone.
Monday, March 26, 2012
Oops! Greece Gets Its Dates Wrong
The PSI participation in foreign law Greek bonds was a meagre 69%. Greece has now extended the deadline for participation to April 4th.
Unfortunately, before then, on April 2nd there is a payment due on some bonds relating to Greek railways.
Was not the whole point of this exercise was for the swap to have been finalised so that bailout conditions were met before bills were due?
Oops!
Unfortunately, before then, on April 2nd there is a payment due on some bonds relating to Greek railways.
Was not the whole point of this exercise was for the swap to have been finalised so that bailout conditions were met before bills were due?
Oops!
Friday, March 9, 2012
Greece Defaults
As expected, the "voluntary" take up of new Greek bonds for old has not reached the 90% threshold necessary for it to be considered "voluntary".
85% of Greek holders of bonds (bound by Greek law) agreed to the deal (ironically the Greek Finance Ministry employees' pension fund was among those that did not agree to a "voluntary" participation), whilst only 69% of non-Greek debt (bound by English law) participated. Needless to say Greece has attempted to move the goalposts on the latter, by extending the period for participation to March 23 (yesterday they denied that they would do this).
Whatever the fiddles and fudges that Greece now attempts, the fact remains that the 90% threshold has not been reached and that CACs will have to be used; ie Greece has defaulted.
For form's sake Isda has announced that its determinations committee will meet at 1pm GMT today, to discuss a potential credit event in Greek CDS.
After that the whole process will be mired in litigation.
Oh, and by the way, does anyone really believe the figures announced by Greece?
Only when they are fully audited by a genuinely independent person/organisation may we have any real faith in the numbers.
Here is a link to the full press release from the Hellenic Republic Ministry of Finance (for what it is worth).
85% of Greek holders of bonds (bound by Greek law) agreed to the deal (ironically the Greek Finance Ministry employees' pension fund was among those that did not agree to a "voluntary" participation), whilst only 69% of non-Greek debt (bound by English law) participated. Needless to say Greece has attempted to move the goalposts on the latter, by extending the period for participation to March 23 (yesterday they denied that they would do this).
Whatever the fiddles and fudges that Greece now attempts, the fact remains that the 90% threshold has not been reached and that CACs will have to be used; ie Greece has defaulted.
For form's sake Isda has announced that its determinations committee will meet at 1pm GMT today, to discuss a potential credit event in Greek CDS.
After that the whole process will be mired in litigation.
Oh, and by the way, does anyone really believe the figures announced by Greece?
Only when they are fully audited by a genuinely independent person/organisation may we have any real faith in the numbers.
Here is a link to the full press release from the Hellenic Republic Ministry of Finance (for what it is worth).
Thursday, March 8, 2012
Deadline Day For Greek Bond Swap
Today is Deadline Day for the Greek bond swap, creditors have until 20:00 GMT to accept the deal.
However, for reasons best known to the Greek government (perhaps something to do with disruption being caused by today's solar flares?), the announcement about the outcome of the deal won't be made until 06:00 GMT Friday.
The hype, spin and misinformation continues as Greece and the Eurozone continue to talk up the prospects of a successful deal. The latest figures being bandied about suggest that there will be a 75% take up, ie 25% of bondholders have not agreed to the deal (it is speculated that hedge funds are actually buying blocking stakes). This will mean that CACs will have to be used, and Greece will officially default (as the deal will not count as "voluntary").
Aside from the legal technicalities, wrt percentages and CACs, there are also the political nuances. Anything short of 80% will be considered by the Germans as being a failure.
Oh, and irrespective of the "success" or otherwise of this deal, the grim financial reality that Greece faces was highlighted this morning by today's unemployment figures that show that 21% of the workforce were unemployed in December (youth unemployment now stands at over 51%!).
However, for reasons best known to the Greek government (perhaps something to do with disruption being caused by today's solar flares?), the announcement about the outcome of the deal won't be made until 06:00 GMT Friday.
The hype, spin and misinformation continues as Greece and the Eurozone continue to talk up the prospects of a successful deal. The latest figures being bandied about suggest that there will be a 75% take up, ie 25% of bondholders have not agreed to the deal (it is speculated that hedge funds are actually buying blocking stakes). This will mean that CACs will have to be used, and Greece will officially default (as the deal will not count as "voluntary").
Aside from the legal technicalities, wrt percentages and CACs, there are also the political nuances. Anything short of 80% will be considered by the Germans as being a failure.
Oh, and irrespective of the "success" or otherwise of this deal, the grim financial reality that Greece faces was highlighted this morning by today's unemployment figures that show that 21% of the workforce were unemployed in December (youth unemployment now stands at over 51%!).
Tuesday, March 6, 2012
Denials and Silence Speaks Volumes
Thursday, in theory, is the deadline for Greece's bond swap (where private sector investors will take a 75% haircut).
Despite the hype being spewed forth by Greek authorities, and those with a vested interest in seeing the deal go through (ie the institutional investors), Greece has been forced to deny rumours that Thursday's deadline may be moved back. Unsurprisingly no one actually believes that the deal can take place without CACs (collective action clauses) being triggered.
The hedge funds have most to gain from CACs being triggered and Greece being declared in default. Hence, hype about IIF's accepting the deal is irrelevant.
The silence of the hedge funds, and the denials about a postponement of Thursday's deadline speaks volumes.
Despite the hype being spewed forth by Greek authorities, and those with a vested interest in seeing the deal go through (ie the institutional investors), Greece has been forced to deny rumours that Thursday's deadline may be moved back. Unsurprisingly no one actually believes that the deal can take place without CACs (collective action clauses) being triggered.
The hedge funds have most to gain from CACs being triggered and Greece being declared in default. Hence, hype about IIF's accepting the deal is irrelevant.
The silence of the hedge funds, and the denials about a postponement of Thursday's deadline speaks volumes.
Saturday, March 3, 2012
Moody's Downgrades Greece
Unsurprisingly Greece has been downgraded by another ratings agency. Moody's has cut Greece's sovereign debt rating to the lowest possible level (from C to Ca).
The Ca rating means that the bonds are classed as being in "default".
Moody's are of the view that there is both a "distressed exchange" and "outright default".
Meanwhile, it is evident that (despite what some may claim and hope), the markets do not believe that the bailout is going to work, Zero Hedge reports the following:
"Nevertheless numerous hedge funds have been accumulating a range of Greek bonds that are governed by foreign law in the hopes of of making a legal challenge."
The media will soon begin to leak details of the actual participation rate, this is very likely to be below the percentage in the hype being spewed forth by the politicians.
The Ca rating means that the bonds are classed as being in "default".
Moody's are of the view that there is both a "distressed exchange" and "outright default".
Meanwhile, it is evident that (despite what some may claim and hope), the markets do not believe that the bailout is going to work, Zero Hedge reports the following:
The media will soon begin to leak details of the actual participation rate, this is very likely to be below the percentage in the hype being spewed forth by the politicians.
Thursday, January 19, 2012
Same Old Lies - Greece Is Busted Flush
In October 2011 the "leaders" of the Eurozone assured the world that the Greek debt crisis was resolved, and that Greek bondholders had accepted a 50% haircut.
As I noted then:
".. there are some "issues" that may well unravel this sooner than the "leaders" of the Eurozone would like".
What a difference a few months make!
Moving forward to the present day, we see Greek finance minister Evangelos Venizelos has been addressing parliament. Greece failed to reach an agreement with its international creditors on Wednesday.
He is still prattling on about doing a deal with bondholders (the deal that the world was told was finalised last year) and has reiterated that he wants any debt swap with private sector bondholders to be voluntary.
Nonsense:
"The "haircut" is, despite the spin (seemingly, according to the Euro spin machine the "haircut" is voluntary, therefore it is not a default!), a default.
Does this matter?
Yes, it does matter.
By defining it as not a default, the Eurozone has null and voided sovereign hedging via CDS (this has not gone down well with those who hedged against default)."
No one believes the Eurozone "leaders", most especially the Greek "leadership", anymore.
There will be no deal, and Greece will default.
As I noted in October last year, Greece is a busted flush.
PERIOD!
As I noted then:
".. there are some "issues" that may well unravel this sooner than the "leaders" of the Eurozone would like".
What a difference a few months make!
Moving forward to the present day, we see Greek finance minister Evangelos Venizelos has been addressing parliament. Greece failed to reach an agreement with its international creditors on Wednesday.
He is still prattling on about doing a deal with bondholders (the deal that the world was told was finalised last year) and has reiterated that he wants any debt swap with private sector bondholders to be voluntary.
Nonsense:
"The "haircut" is, despite the spin (seemingly, according to the Euro spin machine the "haircut" is voluntary, therefore it is not a default!), a default.
Does this matter?
Yes, it does matter.
By defining it as not a default, the Eurozone has null and voided sovereign hedging via CDS (this has not gone down well with those who hedged against default)."
No one believes the Eurozone "leaders", most especially the Greek "leadership", anymore.
There will be no deal, and Greece will default.
As I noted in October last year, Greece is a busted flush.
PERIOD!
Monday, January 9, 2012
Greece Sells Its Soul To The Devil
Greece is attempting to force its bondholders to accept a 60% haircut.
As I noted in September last year:
"..the Greek haircut of 50% that everyone is talking about is of course nonsense."
In order to achieve this haircut, and to ensure that bondholders "accept" it, Greece is to introduce retroactive collection action clauses to bonds.
These will permit some high level of bondholders to agree on an alteration of terms of principal, interest rate or maturity date
This means that debt that is easy to restructure (ie what Greece currently has on its books) is being exchanged for debt that will be impossible to restructure (ie Greece has sold its soul to the devil - the Troika).
As I noted in September last year:
"..the Greek haircut of 50% that everyone is talking about is of course nonsense."
In order to achieve this haircut, and to ensure that bondholders "accept" it, Greece is to introduce retroactive collection action clauses to bonds.
These will permit some high level of bondholders to agree on an alteration of terms of principal, interest rate or maturity date
This means that debt that is easy to restructure (ie what Greece currently has on its books) is being exchanged for debt that will be impossible to restructure (ie Greece has sold its soul to the devil - the Troika).
The Death March of The Euro
Another week has begun in the long drawn out death march of the Euro.
This morning Germany held an auction of Euro4BN in six-month bills, and managed to receive an average yield of MINUS 0.0122%.
This is a first!
It means that investors are desperately looking for a safe haven.
Good luck to them, given that Der Spiegl is reporting (not for the first time) that Greece is heading for a disorderly default and that Czech central bank Governor Miroslav Singer has said
"If there is not the will to give Greece a massive amount of money from European structural funds, I do not see any other solution than its departure from the euro zone and a massive devaluation of the new Greek currency."
Given this crisis what should investors place their hopes and dreams on?
Art seems to be a safe haven, at least that seems to be the conclusion drawn by thieves who have stolen two pictures (one of them being a Picasso) from the National Art Gallery in Athens this morning.
This morning Germany held an auction of Euro4BN in six-month bills, and managed to receive an average yield of MINUS 0.0122%.
This is a first!
It means that investors are desperately looking for a safe haven.
Good luck to them, given that Der Spiegl is reporting (not for the first time) that Greece is heading for a disorderly default and that Czech central bank Governor Miroslav Singer has said
"If there is not the will to give Greece a massive amount of money from European structural funds, I do not see any other solution than its departure from the euro zone and a massive devaluation of the new Greek currency."
Given this crisis what should investors place their hopes and dreams on?
Art seems to be a safe haven, at least that seems to be the conclusion drawn by thieves who have stolen two pictures (one of them being a Picasso) from the National Art Gallery in Athens this morning.
Wednesday, January 4, 2012
Spain in Denial
According to Spanish newspaper Expansion, the Spanish government is considering applying for loans from the EU's rescue fund and from the IMF, in order to bailout Spain's beleaguered finance industry.
Unsurprisingly the Spanish government have denied this.
Even more unsurprisingly the markets don't believe the denial, and are pushing Spanish yields up.
Unsurprisingly the Spanish government have denied this.
Even more unsurprisingly the markets don't believe the denial, and are pushing Spanish yields up.
Tuesday, December 13, 2011
Greece Heading For Default
When Angela Merkel said that there would be no more "haircuts", it seems that she was telling the truth.
Talks between the Greek government and bondholders have broken down.
What does this mean?
Greece is about to default on its debts.
No More haircuts!
Talks between the Greek government and bondholders have broken down.
What does this mean?
Greece is about to default on its debts.
No More haircuts!
Friday, December 2, 2011
Merkel Nixes Eurobonds - Again!
Angela Merkel has again adamantly stated her opposition to Eurobonds as a means of saving the dying Euro experiment.
Quote: "Null and Void"
For good measure, Chancellor Merkel also gave a fulsome "Nein!" to the ECB acting as a lender of last resort.
She noted that the Euro crisis will take years to "sort out".
In terms of treaty adjustments and EU politics, she is correct. However, the Eurozone and global economy will not wait for years.
In the short term, whilst the politicians of Europe attempt to change treaties etc the markets need to be assuaged, otherwise the markets will tear the Eurozone apart.
Merkel and German politicians fret about "moral hazard". However, as I have stated on this site many times before, if your neighbour deliberate/carelessly sets fire to his house you help put the fire out first (lest it engulf your house as well) before you give him a kicking for being so careless.
Merkel et al need to bite the bullet and put a line under this issue now, with a major financial intervention by the ECB, new treaties in the coming years can address the issue of "moral hazard".
Quote: "Null and Void"
For good measure, Chancellor Merkel also gave a fulsome "Nein!" to the ECB acting as a lender of last resort.
She noted that the Euro crisis will take years to "sort out".
In terms of treaty adjustments and EU politics, she is correct. However, the Eurozone and global economy will not wait for years.
In the short term, whilst the politicians of Europe attempt to change treaties etc the markets need to be assuaged, otherwise the markets will tear the Eurozone apart.
Merkel and German politicians fret about "moral hazard". However, as I have stated on this site many times before, if your neighbour deliberate/carelessly sets fire to his house you help put the fire out first (lest it engulf your house as well) before you give him a kicking for being so careless.
Merkel et al need to bite the bullet and put a line under this issue now, with a major financial intervention by the ECB, new treaties in the coming years can address the issue of "moral hazard".
Monday, November 28, 2011
The Abyss
Starting the week as it will most surely go on, the OECD has given an urgent warning that Europe, and by definition the global economy, is standing on the edge of the abyss.
The OECD stated that the failure of EU leaders to stem the crisis could "massively escalate economic disruption" and end in "highly devastating outcomes".
"The euro area crisis represents the key risk to the world economy at present."
Needless to say, the Eurozone seems determined to dig its (and the global economy's) own grave, and continues to sow the seeds of confusion and despair.
Die Welt reports that Germany is considering issuing joint 'elite bonds' with five fellow AAA nations. That of course means the creation of a two speed Eurozone. Needless to say the German government has issued a hasty denial of the plan.
Which, given that France may well lose its AAA rating, is doubtless welcome news for the French (assuming that is, the Germans are being truthful in their denial).
Meanwhile in Washington, Barack Obama will today meet European Council president Herman Van Rompuy and European Commission president José Manuel Barroso at the annual EU-US summit.
Good luck with that then!
The OECD stated that the failure of EU leaders to stem the crisis could "massively escalate economic disruption" and end in "highly devastating outcomes".
"The euro area crisis represents the key risk to the world economy at present."
Needless to say, the Eurozone seems determined to dig its (and the global economy's) own grave, and continues to sow the seeds of confusion and despair.
Die Welt reports that Germany is considering issuing joint 'elite bonds' with five fellow AAA nations. That of course means the creation of a two speed Eurozone. Needless to say the German government has issued a hasty denial of the plan.
Which, given that France may well lose its AAA rating, is doubtless welcome news for the French (assuming that is, the Germans are being truthful in their denial).
Meanwhile in Washington, Barack Obama will today meet European Council president Herman Van Rompuy and European Commission president José Manuel Barroso at the annual EU-US summit.
Good luck with that then!
Monday, November 21, 2011
The European Financial Clusterfuck
The European financial clusterfuck continues this week unabated.
Here are but a few headlines to start the week with:
- Moody's has issued a downgrade warning on France.
- Despite a landslide victory in Spain, for a party that will implement further austerity measures, markets are falling and Spanish bond yields are rising.
- Hungary has asked the EU and IMF for financial assistance, oddly enough they haven't put a figure on how much they actually want/need!
- The European Commission has sated that the "cure" for Europe's ills are Eurobonds. This has been publicly slapped down by Germany, which stated that Eurobonds were not a "cure" at all.
- The EU's Jean-Claude Juncker says if France were to lose its AAA rating so would the EFSF.
Wrt the latter point, so what?
The EFSF is a busted flush anyway, a downgrade in rating is completely irrelevant.
Oh, and if anyone is remotely interested, Belgium's politicians have yet again failed to form a government (Belgium has now been without a government for 526 days).
The week starts as it means to go on, badly!
Here are but a few headlines to start the week with:
- Moody's has issued a downgrade warning on France.
- Despite a landslide victory in Spain, for a party that will implement further austerity measures, markets are falling and Spanish bond yields are rising.
- Hungary has asked the EU and IMF for financial assistance, oddly enough they haven't put a figure on how much they actually want/need!
- The European Commission has sated that the "cure" for Europe's ills are Eurobonds. This has been publicly slapped down by Germany, which stated that Eurobonds were not a "cure" at all.
- The EU's Jean-Claude Juncker says if France were to lose its AAA rating so would the EFSF.
Wrt the latter point, so what?
The EFSF is a busted flush anyway, a downgrade in rating is completely irrelevant.
Oh, and if anyone is remotely interested, Belgium's politicians have yet again failed to form a government (Belgium has now been without a government for 526 days).
The week starts as it means to go on, badly!
Tuesday, November 15, 2011
ECB Does a Canute
The markets remain unconvinced by the new unelected technocrat government of Italy, and as such the bond yields have risen close to 7%.
The ECB is currently "doing a Canute", and buying bonds in order to keep the yield down.
This of course is merely kicking the can down the road.
The ECB is currently "doing a Canute", and buying bonds in order to keep the yield down.
This of course is merely kicking the can down the road.
Wednesday, November 9, 2011
Veni Vidi Vici
It is now game over for Italy and the Eurozone, as Italian bond yields have breached 7% (a level viewed as economically unsustainable).
Can the Eurozone bailout Italy?
No, there is not enough money in the "kitty".
Emperor Berlusconi's excesses have managed to do what many a Eurosceptic has only ever dreamed of, namely destroy the Eurozone.
To follow the latest updates from Italy and Berlusconi's antics read "Veni Vidi Vici".
Can the Eurozone bailout Italy?
No, there is not enough money in the "kitty".
Emperor Berlusconi's excesses have managed to do what many a Eurosceptic has only ever dreamed of, namely destroy the Eurozone.
To follow the latest updates from Italy and Berlusconi's antics read "Veni Vidi Vici".
Tuesday, November 8, 2011
The End of The Beginning
As Italian bond yields hit a staggering and unsustainable 6.7%, Umberto Bossi of the Northern Leagues has called on Silvio Berlusconi to resign.
Suffice to say Berlusconi will not go without a fight, because he fears losing the immunity from prosecution that remaining in office gives him.
That being said it is clear that he is finished.
The removal of Berlusconi will give some temporary relief to Italy. However, it is clear that this is not the end of the Euro crisis, nor even the beginning of the end, but most likely the end of the beginning.
I should point out that the end of the Euro crisis will occur only when the Euro itself is consigned to the dustbin of history.
The world mnust brace itslef for months of further turmoil, as Eurozone countries are picked off one by one until the "leaders" of the Eurozone finally admit that the "game is up"..
Monday, November 7, 2011
Italy Next in LIne
As Greece shambles towards some form of coalition government which might, given that it has a gun pointed towards its head, "graciously" accept the bailout terms foisted on it by the Eurozone, attention now moves to Italy.
This morning Italian bond yields are rising (6.6% at the moment), and are approaching the levels at which the country will have to ask for a bailout.
The only problem with that is that there is no money with which to bail them out, the EFSF has managed to raise zero funds (despite Eurozone flunkies passing the begging bowl around the world) and the ECB flatly refuses to purchase anymore bonds from Italy unless there is evidence from Italy that it will implement an austerity package.
During the course of this week the markets will push the intractability of the ECB and the stubbornness/shiftiness of the Italian political system to their respective extremes; it will be interesting to see which one breaks first.
This morning Italian bond yields are rising (6.6% at the moment), and are approaching the levels at which the country will have to ask for a bailout.
The only problem with that is that there is no money with which to bail them out, the EFSF has managed to raise zero funds (despite Eurozone flunkies passing the begging bowl around the world) and the ECB flatly refuses to purchase anymore bonds from Italy unless there is evidence from Italy that it will implement an austerity package.
During the course of this week the markets will push the intractability of the ECB and the stubbornness/shiftiness of the Italian political system to their respective extremes; it will be interesting to see which one breaks first.
