Mar 072012
 
 March 7, 2012  Posted by at 4:01 pm Finance

Euro05The estimates of both the required and actual levels of participation in Greece's PSI bond swap offering tomorrow are best described as – "all over the place". Using my gorilla math, it seems that anything below 50% of private sector bondholders participating is outright failure, as if the PSI never even happened. Between 50 and 66% (or is it 75%?) is pretty much a failure as well, since Greece will be forced to use CACs illegally and trigger CDS, as well as increasing the odds of successful litigation and recoveries by holdouts. Above that threshold but below 90-95% means the CACs can be retro-actively inserted without triggering CDS, and near ubiquitous participation means that CACs aren't even needed.

So where does it all stack up one day before the swap gets underway? That's considerably less certain than the required levels above. From what I understand so far, the IIF's "steering committee", plus other significant bondholders who have recently announced their intention to participate, represents a total of 40% of outstanding Greek debt to be restructured. Obviously, that's well below what is needed for even a slightly successful swap. For what it's worth, here is RBS' estimate on how it will all end up, via The Telegraph's live blog (note that RBS is one of the banks that has already agreed to participate):

It is relatively easy to imagine that the participation rate amongst 'regulated' institutions will be close to 100% given that they have for most of them already written off the bulk of their exposures and because of the negative stigma that would be attached to a financial institution singled out as non cooperative. Banks are believed to own around Eur90bn of bonds (at face value and including Greek banks). Insurances companies are believed to own around Eur15bn and are also very likely to be participating in the deal which would lift the participation rate to 51%. Add the Greek social security funds and the participation rate reaches 63%. Based on IIF communication and press reports we arrive to a slightly lower level of 58% (see table below). The bottom line is that we believe that the participation rate will be at the very minimum around 60% (between 58% and 63%) and most likely close to 70%.

 

 

I'm not sure if RBS has factored this in, but Greece has also assembled a veritable coalition of back-up support. Greek banks, for example, are most definitely going to participate (I wonder what kind of fireworks would go off if the banks set to be immediately recapitalized by the Troika bailout decided to decline the restructuring offer tomorrow…). On top of that, Cyprus just announced that it has every intention of participating with enthusiasm and gusto (what would happen to Cyprus if Greek defaulted and got the boot?). Let's see… who else? Oh yeah, Apple said it may donate a few iPads to the cause, and U.S. Senator McCain stated he would drop a few bombs on Syria tomorrow as a distraction, in case the PSI isn't doing so hot. A Coalition of the Willing, ready to roll son!

 

 


 

Home Forums Greece Has Assembled a Coalition of the Willing

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  • #8597

    ashvin
    Participant

    The estimates of both the required and actual levels of participation in Greece's PSI bond swap offering tomorrow are best described as – "al
    [See the full post at: Greece Has Assembled a Coalition of the Willing]

    #1419

    sangell
    Member

    Watched a documentary on US/Russian relations the other night an one scene had Putin sitting at the head of a table of Russian businessman explaining to them he needed their signatures on some agreement but one billionaire seated at the table hadn’t yet signed. All eyes turned toward the recalcitrant oligarch till he got up uncomfortably while Putin, leaning back in his seat pushed the document to the edge of the table and laid his pen on it. The billionaire leaned over and signed and as he stood back up a smug looking Putin says “could I have my pen back”!

    Somehow I can see this same scene being played out as Greek bond holders are asked if they will tender their bonds.

    #1428

    “There seems to be general agreement across the board that the current level of takeup [for Greek bond swap] is, give or take a few per cent, around 30% of the total. Anything under 90% acceptance will require the use of compulsion by Athens (CACs) and most probably then trigger a technical default, following which Wall St’s insurance sector will argue, wriggle, sue and appeal…but almost certainly not pay up.

    Anything les than 66%, and completion cannot take place. Greece will then have seven days to avoid insolvency and – as Bankfurt reminded the Venizealots two days ago – the 130bn euros of bailout will be snatched back. So you can rest assured that, until 66% has been passed, Putin Electoral Rules will apply. Anyone ruling out the likelihood of massaging the numbers is being truly, deeply naive. (It’d get found out in the end of course – but cans, roads, boots etc etc).

    Now, the difference between 30% and 66% is 36%. So far we know that a smallish Swiss Group and two smaller Greek institutions have rejected the offer. The highest estimate I can put on their share is around 4% – a moveable feast because concerned legal groups don’t like the way investors are being pushed around by the rainbow coalition of those who do want the deal to go through, and are encouraging smallholders to band together. Anyway, observe:

    Declarations: 30% pro + 4% anti = 34%.

    100% – 34% spookily = 66%.

    66% – 30% = the Greek government’s target to persuade = 36%.

    34% – 4% = the anti-deal holdouts target = 30%.

    Now on paper, this looks like Athens is in good shape: only 4% naysayers, and 30% already in the bag. The two realities that change all this are (1) the 30% needed by the anti-dealers probably don’t need persuading to stay out at all: if they were in, they’d have said so by now; and (2) if the Venizealots miss their target by just 1%, they’re dead. The anti-dealers, by contrast, need only another 22% out of 30 to knock the acceptance level below 75%, and require a quarter of all bondholders to be compelled using CACs.

    Two further points here. First, my hunch based on feedback from Frankfurt yesterday is that under 75% take-up will trigger at the very least, howls of protest among the German-American-Troika contingent who want Greece amputated right now. They will spend every waking hour between now and March 12th (next Monday) finding things the Greeks didn’t do or lied about in order to save their 130 billion bailout for…who knows? Italy, Spain or perhaps even France. (It sure as hell is not going to be spent on Portugal or Ireland).

    Second, there is still absolutely no accurate assessment of the value of bonds held by Hedge Funds. The total bond pot is 177 billion euros, so around 54 billion is already accounted for. The organisations claiming to ‘represent’ Hedgies tell me their exposure is 10 billion (which I don’t believe) and the doom theorists tell me it’s 50 billion. Let’s say for now that the number is twenty billion. That leaves a whopping 100 billion of junk bonds still unaccounted for.

    Who are these folks? As far as I can tell, nobody knows. Here’s a worryingly consistent set of estimates from the MSM during the last 36 hours:

    ‘The most likely outcome may well be that Greece passes its 75 percent target and then uses CACs to ensnare the remainder’. (Reuters)

    ‘People familiar with the matter say Greece is confident it can get to around 75%’. (Wall St Journal)

    ‘Many of the potential holdouts’ bonds are hedge funds…but takeup is expected to be about 75 per cent’. (FT)

    Tell you what I think: it’s bollocks.”

    GREEK SWAP TAKE-UP: WHO OWNS THE €100bn OF BONDS THAT NOBODY WANTS TO TALK ABOUT?

    #1437

    Golden Oxen
    Participant

    Lucca, Go pay a visit to this gentleman, and make him a deal he can’t refuse. “Yes Godfather.”

    #1441

    jal
    Participant

    Soon … we will find out if the bookeys will pay off the winning bets.

    #1445

    Glennda
    Participant

    Next Ireland will have to stand up as the center of the EU storm with a referendum.

    https://www.tni.org/article/irish-referendum-eus-fiscal-treaty-opens-space-democratic-debate-eu-citizens-alternatives

    I would love to see this expanded and analyzed here.

    #1446

    ashvin
    Participant

    The bond swap dead line is apparently over and done with.

    “Greece’s SKAI TV is reporting that PSI participation has passed 90pc, meaning €107bn will be slashed off debt. Into the last five minutes.” (Telegraph)

    It is still entirely unclear whether a) this is accurate, b) everyone who participated is agreeing to the offer or c) this participation rate was achieved with the use of CACs or without them.

    Probably won’t find out any of that until tomorrow.

    #1448

    jal
    Participant

    It’s a done deal???

    Now the fun will begin!

    The Greeks have taken the bankers to the cleaner!!!

    The bookeys have got to explain why they will not pay out on the winning bets!

    There will be losses among the 0.01% and maybe some payback by the knee smasher.

    #1449

    Greenpa
    Participant

    It occurs to me there is probably no incentive to not just lie (if necessary) and say “Of course we have over 90%!”

    Who is going to check? Nobody on the planet really wants to get into that fight, I’d bet. Just wash hands, move down, see what happens next. Whatever happens next will be hard enough, without making it harder.

    #1452

    Golden Oxen post=1037 wrote: Lucca, Go pay a visit to this gentleman, and make him a deal he can’t refuse. “Yes Godfather.”

    RE

    #1454

    ashvin
    Participant

    (Telegraph)

    20.40 Reuters is reporting that an unnamed Greek official has said the bond swap take-up has topped 85pc on debt under Greek law.

    Meanwhile, SKAI TV (see 19.55) has clarified that its 95pc participation rate includes activation of CACs.

    #1456

    Golden Oxen
    Participant

    @ Reverse Engineer ” Go back to New York and tell your Goombah that NOBODY tells Jack Woltz what to do.”

    #1459

    el gallinazo
    Member

    Off topic – but not really:

    Declaration of the End of the US Republic

    Secretary of War Leon Panetta and Chairman of the Joint Chief of Thugs Martin Dempsey informed the Senate yesterday that they were totally out of the loop when it comes to declaring war, that the USA is no longer a sovereign country, and that international organizations primarily controlled by the global banking cartel will determine USA involvement in wars in the future. But if the Senators are nice, Panetta will drop by and let them know what’s going down.

    When Julius Caesar crossed the Rubicon declaring war on the Roman Republic, he declared that he now was the Senate. Though setting himself up as a tyrant, at least Caesar had not sold out to foreign powers.

    https://www.youtube.com/watch?v=5zNwOeyuG84

    #1465

    Do I PUKE the technicolor yawn now?

    Can somebody somewhere just cut to the chase here and state for the record that the Big Ass Military is run by the folks who own the companies that supply said Military?

    “Legal Basis”?!?! It makes it “legal” if a bunch of Puppet Goobermints with Puppets like Obama-sama in the Driver’s Seat get together in some sort of ad-hoc committee and decide to rain Death from Above on some Random Nation which isn’t Playing Ball with them?

    Blah. This requires a full scale RANT which I got no time for right now.

    In short and to be very clear, there IS no “United States” anymore, if there ever really was. Its all a Puppet Show. You can go back to Smedley Butler and its the same old story. The Military operates at the behest of corporations it serves, NOT the popularly elected Goobermint of J6Ps. About the only difference I see right now is that its become so glaringly obvious and blatant, because the Scumbags at the Top are so far behind the Eight Ball now they’re no longer bothering to disguise it as a Puppet Show anymore.

    This will not End Well.

    RE
    https://www.doomsteaddiner.org

    #1467

    bluebird
    Participant

    Reverse Engineer said “The Military operates at the behest of corporations it serves”

    Yep.

    #1472

    el gallinazo
    Member

    Reverse Engineer said “The Military operates at the behest of corporations it serves”

    Well, don’t stop there. And who owns and dictates to these corporations? You haven’t quite scaled the pyramid with that statement.

    One could well argue that the USA had been under their heel since before the time of Smedley Butler. And there are no Butlers left – he was the last high ranking American military hero. Now we just have the fetid likes of John McCain.

    Even a person with one eye (there is strangely a word for that condition in Spanish – tuerto) can see that we are witnessing the end game of turning the USA into a total 1984 martial law society. It is like a rolling wave and they no longer even attempt to cover it up. Pillsbury Doughgirl Clinton paraphrasing Caesar regarding Libya. At least Caesar could heft a Roman short sword without a subsequent trip to the chiropractor.

    With this rolling wave of totalitarianism, I am beginning to wonder if the lifeboat strategies are sufficient even to help to protect awakening people. Or will they wind up like the 10 million dead Ukrainian peasants and kulaks under Stalin’s collectivization – update read “corporate farms?”

    #1474

    el gallinazo post=1072 wrote: Reverse Engineer said “The Military operates at the behest of corporations it serves”

    Well, don’t stop there. And who owns and dictates to these corporations? You haven’t quite scaled the pyramid with that statement.

    One could well argue that the USA had been under their heel since before the time of Smedley Butler. And there are no Butlers left – he was the last high ranking American military hero. Now we just have the fetid likes of John McCain.

    Even a person with one eye (there is strangely a word for that condition in Spanish – tuerto) can see that we are witnessing the end game of turning the USA into a total 1984 martial law society. It is like a rolling wave and they no longer even attempt to cover it up. Pillsbury Doughgirl Clinton paraphrasing Caesar regarding Libya. At least Caesar could heft a Roman short sword without a subsequent trip to the chiropractor.

    With this rolling wave of totalitarianism, I am beginning to wonder if the lifeboat strategies are sufficient even to help to protect awakening people. Or will they wind up like the 10 million dead Ukrainian peasants and kulaks under Stalin’s collectivization – update read “corporate farms?”

    Oh, it definitely goes back a good deal further than Smedley Butler. Ever wonder where Cmdr. Matthew Perry got the money to build state of the art steam powered Gunboats to go forcibly force the Shogun out of Isolationism, while in the meantime Andrew Jackson had just killed the 2nd Bank of the FSofA. Who was financing the Big Ass Navy? Da Federal Goobermint had no IRS at the time. For that matter, who financed Washington’s Navy?

    Anyhow, I dug up a Rant I wrote last year which covers the direction this whole thing is going, which I will have up on DD in just a bit. You should drop in and say Hi! at least. All Lurker Readers make a very dull board. LOL.

    RE

    #1475

    chesnok
    Member

    el gallinazo post=1072 wrote:

    With this rolling wave of totalitarianism, I am beginning to wonder if the lifeboat strategies are sufficient even to help to protect awakening people. Or will they wind up like the 10 million dead Ukrainian peasants and kulaks under Stalin’s collectivization – update read “corporate farms?”

    Care to follow up on this thought, El G? What are we to do then?

    I try to practice the detached & amused observer stance of D. Orlov and George Carlin, but I’m not much good at it.

    #1476

    Discussing the Geopolitical consequences of the MIC War Policies

    https://www.doomsteaddiner.org/blog/2012/03/09/parsing-the-middle-east/

    RE

    #1479

    jal
    Participant

    Greeks cannot pay back their first loans so lend them more money so that they can ask for more money.
    How many times do the Greeks get to scam the bankers before they get the picture and say no more loans.
    Maybe never. After all its not their money or its not even real money.

    https://www.zerohedge.com/news/greece-round-iii-which-we-learn-greek-debt-actually-increased-post-default

    Greece – Round III, In Which We Learn That Greek Debt Actually INCREASED Post-Default

    The Debt of Greece
    The somewhat amusing part of this entire transaction is that the debt of Greece has been INCREASED. Greece and the EU handed private holders $138Bn in write-offs but with the addition of the new loan, $171Bn, the gross debt for Greece increased by $33Bn and this is if all of the legal challenges favor Greece. The total debt of Greece (sovereign, municipal, corporate and bank) has just increased from $1.20 Trillion to $1.233 Trillion and all accomplished by this brilliant plan that did nothing except to tag investors and ramp up the debt load for the country.

    Since the system is so complex, it cannot be allowed to default. Therefore, expect the bankers to keep paying for the degrading lifestyle of the greeks.

    FLASH NEWS:

    4,000 CREDIT DEFAULT HAVE TRIGGERED

    #1491

    Glennjeff
    Participant
    #1516

    jal
    Participant

    https://www.zerohedge.com/news/eight-hundred-pound-greek-gorilla-enters-room

    The Eight Hundred Pound Greek Gorilla Enters The Room

    Allow me to now present to you the “OTHER” Greek debt that is outstanding and will have to be accounted for as the country defaults. Detailed below are some of the “OTHER” sovereign obligations of the Greek government which have now been submitted to the ISDA and I list some of them below. You will note that there are bank bonds, Hellenic Railway bonds, Urban Transportation bonds et al that are guaranteed by Greece. You will also note that there are bonds tied to Inflation, Floating Rate Notes, Asset-Backed securities and a whole mélange of other structured products with a Greek sovereign guarantee. What we all thought was fact is now clearly fiction and default will now bring “Acceleration” one could reasonably bet in all kinds of these securitizations and in all kinds of currencies.  This could come from the ratings agencies placing Greece in “Default” or it could come from the CDS contracts being triggered depending upon each indenture and you will also note that a great many of these off balance sheet securitizations are governed by English Law and not Greek Law. You may also wish to consider the fallout to the banking system as the lead managers of all of these deals could find themselves behind the eight ball as various clauses trigger and as the holders of these securitizations line up at the judicial bench [ZH note: there is a reason why Allen & Overy is getting paid $1500 an hour to indemnify ISDA with a plethora of exculpation clauses – they know what is coming] The ISDN numbers are on all of these securities and the lead managers may be found on Bloomberg or other sources as well as the holders of the debt.  The curtain just lifted and the show is about to get way too interesting!
    The full ISDA list may be found here:
https://www2.isda.org/preliminary-greek-obligations/

    #1527

    JoeP
    Member
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