Lettura consigliata per il fine settimana, qualche passo da "The Greek debt trap: an escape plan":
[...] there is only a small expected decline in public debt of €11.9 billion in 2012. As a percent of GDP, there is even an increase of 5.5 percent. Why has the debt ratio not declined, despite the sizeable debt restructuring?
We were not able to reconcile all the elements of the increase, but the major items are:
€29.7 billion was given to investors in the form of European Financial Stability Facility (EFSF) securities, ie PSI (private-sector involvement) Payment Notes, as part of the debt exchange (see Appendix 1);
€4.8 billion was given to investors to compensate for the accrued interest upto the debt exchange in the form of EFSF securities, ie PSI Accrued Interest Notes (see Appendix 1);
€44.8 billion is needed to recapitalise Greek banks, of which about €25 billion covered the losses that the banks assumed as a consequence of the PSI (source: the table on page 30 of European Commission, 2012);
Greece still expected to have a sizeable budget deficit in 2012 amounting to €15.1 billion; of this, only €3.4 billion is the primary deficit and the rest are interest payments (source: IMF, 2012b);
There are some additional items amounting to €6.9 billion in total, such as technical differences between accrual and cash accounting, the settlement of arrears to suppliers, and the Greek contribution to the capital of the European Stability Mechanism (ESM) (source: the table on page 30 of European Commission, 2012);
These factors, combined with €3.2 billion in planned privatisation revenues in 2012 and the €1.2 billion ‘official sector involvement’4 agreed in February 2012, are about €35 billion short of the projected increase in debt. The cash buffer of the Greek government is also expected to be increased during 2012, but that cannot explain in full the discrepancy.
The debt ratio also increases due to the expected 6.4 percent fall in nominal GDP in 2012.
3.2 Debt reduction without a direct loss to official lenders (8, nota riportata di seguito)
As an acknowledgement of the unsustainability of the Greek public debt trajectory, IMF Managing Director Christine Lagarde in September 2012 suggested considering the writing off some European loans to Greece, according to Bloomberg (2012). This proposal has been resisted by European lenders so far. The current position of some major European policymakers is no debt write-off, no new lending, but also no default and exit from the euro. Instead, they are considering proposals such as lengthening the maturity and reducing the interest rate on current bilateral loans, passing to Greece the capital gain from the current Greek bond holdings of the European Central Bank, or buying-back privately held bonds at their current low market prices.
Among these suggestions, lengthening the maturity of bilateral loans does not lead to debt reduction. Without market access, this just changes the composition of official lending, since all new borrowing has to be provided by European partners in any case. Yet lengthening the maturity of bilateral loans would help from a public relations perspective, because in this case the additional commitment from the EFSF/ESM would be less. Also, a case can be made for lengthening the maturity of IMF lending to keep the IMF involved for as long as euro-area partners are involved, thereby reducing the future financing need from euro-area partners.
The three other options could lead to a reduction in the nominal value of Greek public debt without causing direct losses to euro-area partners. Reducing the lending rate of bilateral loans to close to actual borrowing costs, and exchanging the ECB holding with new bonds worth as much as the actual purchase value by the ECB, would just eliminate the profits European partners would make from Greek rescue operations. Therefore, in our calculations we assess these options, plus the frontloading of privatisation receipts:
(a) Reducing the lending rate on bilateral loans to 50 basis points over the 3-month Euribor;
(b) Exchange ECB/national central bank (NCB) holdings at the purchase price, which we assume to be 83 percent of the notional;
(c) Buy-back of all privately-held debt at a 7 percent exit yield (financed from an EFSF/ESM loan);
(d) Purchase of state assets by an internationally-controlled (eg EU or EBRD-EIB-WB (European Bank for Reconstruction and Development-European Investment Bank-World Bank)) holding company mandated to restructure and sell them, which we consider as front-loading €20 billion in privatisation receipts;
(e) The combination of these four measures.
(8) We do not consider a default on the remaining private sector holdings. The New Greek bonds are safeguarded through a cofinancing clause with the EFSF, ie any Greek government debt service arrears have to be distributed pro rata by the New Greek bonds and the service of the EFSF loans which were granted to finance the PSI Payment Notes and Accrued Interest Notes (See Zettelmeyer, Trebesch and Gulati, 2012). Also, since the holders of the New Greek bonds already suffered massive losses during the debt exchange of March/April 2012, it would not be fair to burden them further. There would be a case for restructuring the holdouts, even if their magnitude is small (Table 1) and therefore would not change the picture much.
Il punto (c) menzionato sopra:
Buy-back of all privately-held debt
In principle, Greece could buy-back its sovereign bonds, which are currently traded well below their face value (Figure 4), with the purchase financed by an ESM loan10. This is a controversial proposal, because a massive buy-back operation would likely increase the market price, thereby reducing the gain in terms of debt reduction. Also, not all market participants would sell their bond holdings, especially if the possibility of default is strictly excluded by the accompanying communication.
How can the market price at which bonds could be repurchased be approximated? Instead of forming an assumption about the price itself, we made an assumption about the ‘exit yield’ at which investors would sell their bonds. That is, as the bond price increases, the yield on holding the bonds to maturity declines. Figure 5 depicts this relationship considering the average price of the New Greek bonds (which are rather sensitive to the exit yield, because they are long-maturity bonds) and the average price of the holdout bonds (which are less sensitive, due to their shorter maturity and generally higher coupon yields).
Investors would most likely sell their long-maturity Greek bond holdings if their yield would fall to about 6 percent per year, as they would be better off by buying, for example, Spanish bonds at such yields. So the exit yield could be somewhat higher and we assume 7 percent per year, leading to a 63 percent price for New Greek bonds and 96 percent for holdouts. We assume that the category 'others' (see Table 1) could be purchased back at the same price as the holdouts. Therefore, the combined €72.3 billion face-value of privately-held debt could be bought back for €49 billion, with a reduction in the face value of debt of €23.4 billion.