Rating Agencies Threaten To Vitiate New Greek Loan
All three rating agencies Moody’s, S&P and Fitch have put barriers against a "solution" of triple support package to Greece, prepared by the "technical" team of the Eurogroup.
All three hit the “Achilles heel” of the package, namely its third part regarding the roll over of bonds maturing in 2012-2014, estimated by Eurogroup’s EWG at €20b. The first part of the package is a new loan of €30-35b, the second refers to revenues of €25b through privatizations and thirdly the participation of institutional investors by holding (and roll over) of bonds of €20b.
The sore spot is that German Chancellor Angela Merkel needs to ensure the participation of private institutional investors in order to pass a new loan in the German House.
The three rating agencies argue that a roll over of Greek debt is actually mandatory and not voluntary, as the investors will be forced to hold old bonds or exchange them for new ones under the threat of a Greek default. In this context, they threat that this would be considered a “credit event”.
At the same time, European Central Bank Jean-Claude Trichet expressed the opposite opinion, supporting the program. He stated publicly that the solution of voluntary bond holding, as in the case of Vienna Initiative, has no problem, adopting the financial scheme already prepared.
Interestingly, German banks are desperate to ensure their bonds as their portfolios have €62b PIGS bonds, with the €23b being Greek.
On this basis, ECB has purchased or guaranteed more than €150b Greek bonds.
The front is open, as Merkel is expected to ask US President to limit the activity of large hedge funds in return of the grant of a new loan to Greece.
Merkel believes that the funds are responsible for the vicious circle of debt crisis in Eurozone and asks for limiting of multiple borrowing of hedge funds, along with stricter control on rating agencies.
According to sources, the U.S. government agrees with the German Chancellor but it is unable, due to correlations in the House and the Senate, to pass any relevant regulations.
Rumours go around that this pressure has begun to be exerted indirectly though the investigation of complaints against Goldman Sachs.
(capital.gr)
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La situazione attuale.