Sunday, January 15, 2012

Beware of Greeks Bearing Bonds

EuroIs that the Fat Lady I hear singing? Greece gets closer to brink of bankruptcy - Telegraph Talks on the "voluntary" 50 percent loss on Greek debt has fallen apart. Not surprising, really.
Three months of negotiations ground to a halt on Friday night, amid a wave of downgrades by ratings agency Standard & Poor’s aimed at a clutch of European countries, including France.

The unexpected breakdown in talks between Greece and its private-sector creditors has taken the country a step closer to bankruptcy after a failure to sign up lenders to a voluntary and “orderly” 50pc haircut to their holdings.
Of course the Greeks weren't offering 50 percent on a net-present-value basis, but that isn't listed here. (Might not make the bankers look too eeeevil if the facts were displayed for all to see.)
On Friday evening, the Washington-based Institute of International Finance (IIF), which represents bondholders, said that talks had not produced a “constructive consolidated response by all parties”. The IIF had aimed to implement a swap into new bonds this month. But the two sides still have to agree on the coupon and maturity of the new bonds to determine losses for investors.

The breakdown in talks has been described as “catastrophic” by insiders, who say the repercussions of a default would be felt not just by Greece but by all of Europe.
The new "technocrat" Prime Minister of Greece, Lucas Papademos, is wringing his hands, and worrying about "economic dangers." Gee, ya think?

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