discipline
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Direi che possiamo metterci comodi, fino ad allora c'è poco da fare se non il rumore delle dichiarazioni contraddittorie sui media.
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Titoli di Stato area Euro GRECIA Operativo titoli di stato - Cap. 2
- Creatore Discussione tommy271
- Data di Inizio
- Stato
discipline
Guest
To ring-fence the ECB in Greece… or not
There was a nice line in the FT’s latest story on Greece’s debt restructuring:
We do mean explosive, although the issue’s a bit obscure if you haven’t been following the ins and outs of Greek PSI. You might know this bit quite well: the ECB is now the largest single investor in Greek bonds. But – oops – the ECB has excluded its holdings of Greek debt (largely acquired from its bond-buying programme) from the bond swap. This operation would have seen it forced to take an economic loss of some 50 or 60 per cent.
The ECB won’t take part, most analysts don’t even count its holdings in the numbers they crank out for the effects of PSI on debt reduction, the other bondholders simmer about how unfair this is (it is unfair), and so on. It’s also about the ECB not being seen to legitimate sovereign debt restructuring in the eurozone through its involvement, we suspect.
Thus, the ECB is missing out on having its bonds converted to English law – a key creditor protection given out in the PSI in return for investors agreeing to take losses. So the ECB will join those who refuse the offer and keep their old Greek-law bonds. No problem!… or so you might think. It’s not like Greece will stop servicing these debts. (Unlike PSI exercises in other countries, where sometimes there is a preference to service restructured debt over old debt.) About the same time though, Greece is arming itself with the means to “discourage” holdouts by changing Greek law through a legislative act (the “retrofit” CACs), making Greek law bonds easier to restructure later on. Greek law bonds, such as those held by the ECB.
That — at length — is the problem here.
Anyway, if you’re not sure what CACs are or how they arrived in the Greek PSI debate, we’ve done a quick catch-up primer – otherwise keep scrolling down…
__________________________
A CAC primer — skip if you’re already a Greek PSI nerd…
Collective action clauses basically allow a bond’s terms to be changed if a large (usually at least two-thirds) majority of the holders vote in favour. Bonds are usually either issued with CACs already in them or not — so a retroactive CAC, inserted via changing the entire over-arching governing law of the bonds, is a little bit controversial to say the least.
Nevertheless the idea was thought up by top sovereign debt lawyer (and legal adviser to Greece) Lee C. Buchheit and G. Mitu Gulati as a clean way to deal with restructuring Greece’s debt. After all, the funny thing about Greek debt is that most of it is governed under Greek law (so amenable to dedicated legislation by the Greek parliament). The IMF gave its benediction to retro-CACs in its last review of Greece’s bailout, so it’s no surprise that they are now policy of the day.
__________________________
OK, onto the juicy bit — the ECB’s role
Best to do this if you pretend you’re a bondholder faced with Greek PSI.
If you volunteer to restructure your bonds as part of the PSI, the new bonds you receive will be governed under English law instead of Greek law. You will also find CACs inserted into the new bonds (ergo, you are exposed to future restructuring) but Greece won’t be able to alter or add to this clause, because of the English law provision. A general point which is important to note: CACs can be structured differently from bond to bond — for example, they can have different voting thresholds (66 per cent? 75 per cent?) or they might only apply to certain terms. Naturally we have to wait for the final publication of Greece’s PSI terms for total clarity on any of these points.
If you don’t volunteer, you’re now left with the same old Greek-law bonds you were holding in the first place. The PSI goes ahead while the Greek parliament prepares to draw up and vote on the retro-CAC law. As a holdout seeking to be paid back in full on your Greek bond holdings, you have a few options to boost your negotiating power:
From your perspective (as a bondholder), the ECB’s holdings make formulating a strategy considerably difficult since the exact bond issues that the central bank holds is not known. If there isn’t a carve out, then a substantial holding of a given issue by the ECB might mean a block on any future restructuring efforts, should the central bank take its usual stance of refusing to be involved in any whiff of PSI.
The ECB itself, in the abstract, does has considerable leverage (see point three above). But in the context of Greek, European Union, or even European human rights law, it’s however difficult to see how a carve-out would be legally defensible or even practicable.
But on the other hand, it was originally difficult to see how the ECB could square buying billions of euros of Greek bonds with the default risk they presented. Even so, the ECB carried on and became the largest single holder anyway. Throughout the same period, ECB liquidity has become indispensable to keeping Greek banks alive.
Certainly, Greek bond write-down losses to the ECB would be huge. Barclays Capital analysts estimated on Tuesday that the central bank is sitting on over €20bn of Greek bond losses — if the holdings were marked to market. In fact they aren’t. But the ECB would face this kind of loss if it accepted the PSI or waited for CACs to trigger further down the line. Maybe it can absorb this through its more than €80bn capital and reserves (or through its reserves revaluation accounts of more than €300bn, though these do not normally absorb credit losses). Ultimately the ramifications are much wider though.
If the ECB resisted insertion of CACs into its own holdings successfully, that would suggest the central bank was indistinguishable from a senior creditor to Greece. Peripheral sovereigns, and the buyers of their debt, may well take note in the possible implicit move in seniority…
And that is the sort of contagion risk, in fact, that the ECB likes to sermonise about.
FT Alphaville To ring-fence the ECB in Greece… or not
There was a nice line in the FT’s latest story on Greece’s debt restructuring:
Questions are also being raised about the ECB’s estimated €45bn of Greek sovereign holdings. Collective action clauses are likely to be introduced into Greek bonds by the PSI deal, leaving the ECB – which has said it will not participate in the voluntary restructuring – potentially in an uncomfortable position in the future. “The ECB’s holding will be the story to watch in the next few months,” a person close to bondholders said.
And when you add this on Monday, from Matina Stevis of Dow Jones…
According to [a] troika official, Greece will retrofit the bonds with CACs to gain leverage but will not necessarily use them to bind in bondholders resisting the ongoing restructuring negotiations…
…You potentially have a legally, and politically, explosive precedent. All of it centred around the ECB’s (technically, the Eurosystem’s) €40bn-plus of Greek bonds. Excuse us if we go into some length here, but we’ve written on this topic before and the ramifications aren’t getting through…
We do mean explosive, although the issue’s a bit obscure if you haven’t been following the ins and outs of Greek PSI. You might know this bit quite well: the ECB is now the largest single investor in Greek bonds. But – oops – the ECB has excluded its holdings of Greek debt (largely acquired from its bond-buying programme) from the bond swap. This operation would have seen it forced to take an economic loss of some 50 or 60 per cent.
The ECB won’t take part, most analysts don’t even count its holdings in the numbers they crank out for the effects of PSI on debt reduction, the other bondholders simmer about how unfair this is (it is unfair), and so on. It’s also about the ECB not being seen to legitimate sovereign debt restructuring in the eurozone through its involvement, we suspect.
Thus, the ECB is missing out on having its bonds converted to English law – a key creditor protection given out in the PSI in return for investors agreeing to take losses. So the ECB will join those who refuse the offer and keep their old Greek-law bonds. No problem!… or so you might think. It’s not like Greece will stop servicing these debts. (Unlike PSI exercises in other countries, where sometimes there is a preference to service restructured debt over old debt.) About the same time though, Greece is arming itself with the means to “discourage” holdouts by changing Greek law through a legislative act (the “retrofit” CACs), making Greek law bonds easier to restructure later on. Greek law bonds, such as those held by the ECB.
That — at length — is the problem here.
Anyway, if you’re not sure what CACs are or how they arrived in the Greek PSI debate, we’ve done a quick catch-up primer – otherwise keep scrolling down…
__________________________
A CAC primer — skip if you’re already a Greek PSI nerd…
Collective action clauses basically allow a bond’s terms to be changed if a large (usually at least two-thirds) majority of the holders vote in favour. Bonds are usually either issued with CACs already in them or not — so a retroactive CAC, inserted via changing the entire over-arching governing law of the bonds, is a little bit controversial to say the least.
Nevertheless the idea was thought up by top sovereign debt lawyer (and legal adviser to Greece) Lee C. Buchheit and G. Mitu Gulati as a clean way to deal with restructuring Greece’s debt. After all, the funny thing about Greek debt is that most of it is governed under Greek law (so amenable to dedicated legislation by the Greek parliament). The IMF gave its benediction to retro-CACs in its last review of Greece’s bailout, so it’s no surprise that they are now policy of the day.
__________________________
OK, onto the juicy bit — the ECB’s role
Best to do this if you pretend you’re a bondholder faced with Greek PSI.
If you volunteer to restructure your bonds as part of the PSI, the new bonds you receive will be governed under English law instead of Greek law. You will also find CACs inserted into the new bonds (ergo, you are exposed to future restructuring) but Greece won’t be able to alter or add to this clause, because of the English law provision. A general point which is important to note: CACs can be structured differently from bond to bond — for example, they can have different voting thresholds (66 per cent? 75 per cent?) or they might only apply to certain terms. Naturally we have to wait for the final publication of Greece’s PSI terms for total clarity on any of these points.
If you don’t volunteer, you’re now left with the same old Greek-law bonds you were holding in the first place. The PSI goes ahead while the Greek parliament prepares to draw up and vote on the retro-CAC law. As a holdout seeking to be paid back in full on your Greek bond holdings, you have a few options to boost your negotiating power:
- Increase your position, eventually holding enough of the particular bond or bonds in which you’re interested to defeat even a super-majority vote triggered by the CAC. Hope the Greek government doesn’t change the rules and pass another law to change the bonds’ terms directly (or be ready to sue if they do. See below for drawbacks here)
- Claim the retro-CAC impairs your legal rights, sue Greece and seek to have the courts give you an effective remedy. Prepare to go to lots of courts and to devote years of your life to the case
- Hold the Greek banking system to ransom, by controlling its supply of both normal and emergency central bank liquidity, and thus ultimately presenting Greek officials with the choice of staying in the euro, or saving their banks
From your perspective (as a bondholder), the ECB’s holdings make formulating a strategy considerably difficult since the exact bond issues that the central bank holds is not known. If there isn’t a carve out, then a substantial holding of a given issue by the ECB might mean a block on any future restructuring efforts, should the central bank take its usual stance of refusing to be involved in any whiff of PSI.
The ECB itself, in the abstract, does has considerable leverage (see point three above). But in the context of Greek, European Union, or even European human rights law, it’s however difficult to see how a carve-out would be legally defensible or even practicable.
But on the other hand, it was originally difficult to see how the ECB could square buying billions of euros of Greek bonds with the default risk they presented. Even so, the ECB carried on and became the largest single holder anyway. Throughout the same period, ECB liquidity has become indispensable to keeping Greek banks alive.
Certainly, Greek bond write-down losses to the ECB would be huge. Barclays Capital analysts estimated on Tuesday that the central bank is sitting on over €20bn of Greek bond losses — if the holdings were marked to market. In fact they aren’t. But the ECB would face this kind of loss if it accepted the PSI or waited for CACs to trigger further down the line. Maybe it can absorb this through its more than €80bn capital and reserves (or through its reserves revaluation accounts of more than €300bn, though these do not normally absorb credit losses). Ultimately the ramifications are much wider though.
If the ECB resisted insertion of CACs into its own holdings successfully, that would suggest the central bank was indistinguishable from a senior creditor to Greece. Peripheral sovereigns, and the buyers of their debt, may well take note in the possible implicit move in seniority…
And that is the sort of contagion risk, in fact, that the ECB likes to sermonise about.
FT Alphaville To ring-fence the ECB in Greece… or not
PASTELLETTO
Guest
13:27 - Eurozona: Goldman Sachs, arrivera' intatta al 2013 ma a 4 condizioni -2-
(Il Sole 24 Ore Radiocor) - Milano, 10 gen - Riguardo al
punto 3, relativo alle riforme in Spagna e Italia, Goldman
Sachs rileva come se "attuati in maniera efficace, questi
programmi promettono di stabilizzare Italia e Spagna sebbene
solo nel medio termine". Annunciare programmi ambiziosi di
riforma, osserva tuttavia la banca americana, non e' mai
stato un problema e semmai in passato le mancanze sono
presto emerse in fase di attuazione. "Dalla prospettiva
delle autorita' europee - continua il rapporto di Goldman - e'
difficile immaginare un set di circostanze politiche nei
paese periferici piu' favorevole di quello attuale. In Italia
vi e' ora un governo tecnocratico che e' guidato da
professionisti altamente qualificati e tenuti in massima
stima e considerazione dai colleghi europei. E in Spagna e'
stato appena eletto un nuovo governo sulla base di un
programma elettorale che aveva abbracciato il programma di
aggiustamento dei conti richiesto dalla Ue e gia' introdotto
dall'esecutivo precedente. Questi due governi ora devono
mantenere fede alla promesse. Non possiamo attenderci nuove
sorprese sotto forma di nuove sostanziali misure in aggiunta
quelle gia' annunciate sino ad ora (sebbene sarebbero
benvenute). Ma e' sfortunatamente alquanto plausibile che i
mercati rimarranno delusi se si materializzeranno rischi di
una implementazione insufficiente". Goldman vede in
particolare due rischi. Il primo e' che i governi non
riescano a ottenere dai rispettivi parlamenti l'approvazione
necessaria per varare parti importanti dei programmi di
riforma visto che molti hanno interesse a difendere lo
status quo. Il secondo e' che il sostegno parlamentare venga
meno al governo qualora questo dovesse risentire sul fronte
della popolarita' causa le misure di austerita' varate sino ad
ora. "La minaccia che queste dinamiche politiche portino
l'Italia o la Spagna a deviare dal loro cammino annunciato
di riforme - conclude Goldman - rappresenta l'elemento
centrale da monitorare sotto questo aspetto".
cop
Noooo Goldman Sucks noooo.
(Il Sole 24 Ore Radiocor) - Milano, 10 gen - Riguardo al
punto 3, relativo alle riforme in Spagna e Italia, Goldman
Sachs rileva come se "attuati in maniera efficace, questi
programmi promettono di stabilizzare Italia e Spagna sebbene
solo nel medio termine". Annunciare programmi ambiziosi di
riforma, osserva tuttavia la banca americana, non e' mai
stato un problema e semmai in passato le mancanze sono
presto emerse in fase di attuazione. "Dalla prospettiva
delle autorita' europee - continua il rapporto di Goldman - e'
difficile immaginare un set di circostanze politiche nei
paese periferici piu' favorevole di quello attuale. In Italia
vi e' ora un governo tecnocratico che e' guidato da
professionisti altamente qualificati e tenuti in massima
stima e considerazione dai colleghi europei. E in Spagna e'
stato appena eletto un nuovo governo sulla base di un
programma elettorale che aveva abbracciato il programma di
aggiustamento dei conti richiesto dalla Ue e gia' introdotto
dall'esecutivo precedente. Questi due governi ora devono
mantenere fede alla promesse. Non possiamo attenderci nuove
sorprese sotto forma di nuove sostanziali misure in aggiunta
quelle gia' annunciate sino ad ora (sebbene sarebbero
benvenute). Ma e' sfortunatamente alquanto plausibile che i
mercati rimarranno delusi se si materializzeranno rischi di
una implementazione insufficiente". Goldman vede in
particolare due rischi. Il primo e' che i governi non
riescano a ottenere dai rispettivi parlamenti l'approvazione
necessaria per varare parti importanti dei programmi di
riforma visto che molti hanno interesse a difendere lo
status quo. Il secondo e' che il sostegno parlamentare venga
meno al governo qualora questo dovesse risentire sul fronte
della popolarita' causa le misure di austerita' varate sino ad
ora. "La minaccia che queste dinamiche politiche portino
l'Italia o la Spagna a deviare dal loro cammino annunciato
di riforme - conclude Goldman - rappresenta l'elemento
centrale da monitorare sotto questo aspetto".
cop
Noooo Goldman Sucks noooo.
Nobody's
Γένοιο οἷος εἷ
13:27 - Eurozona: Goldman Sachs, arrivera' intatta al 2013 ma a 4 condizioni -2-
(Il Sole 24 Ore Radiocor) - Milano, 10 gen - Riguardo al
punto 3, relativo alle riforme in Spagna e Italia, Goldman
Sachs rileva come se "attuati in maniera efficace, questi
programmi promettono di stabilizzare Italia e Spagna sebbene
solo nel medio termine". Annunciare programmi ambiziosi di
riforma, osserva tuttavia la banca americana, non e' mai
stato un problema e semmai in passato le mancanze sono
presto emerse in fase di attuazione. "Dalla prospettiva
delle autorita' europee - continua il rapporto di Goldman - e'
difficile immaginare un set di circostanze politiche nei
paese periferici piu' favorevole di quello attuale. In Italia
vi e' ora un governo tecnocratico che e' guidato da
professionisti altamente qualificati e tenuti in massima
stima e considerazione dai colleghi europei. E in Spagna e'
stato appena eletto un nuovo governo sulla base di un
programma elettorale che aveva abbracciato il programma di
aggiustamento dei conti richiesto dalla Ue e gia' introdotto
dall'esecutivo precedente. Questi due governi ora devono
mantenere fede alla promesse. Non possiamo attenderci nuove
sorprese sotto forma di nuove sostanziali misure in aggiunta
quelle gia' annunciate sino ad ora (sebbene sarebbero
benvenute). Ma e' sfortunatamente alquanto plausibile che i
mercati rimarranno delusi se si materializzeranno rischi di
una implementazione insufficiente". Goldman vede in
particolare due rischi. Il primo e' che i governi non
riescano a ottenere dai rispettivi parlamenti l'approvazione
necessaria per varare parti importanti dei programmi di
riforma visto che molti hanno interesse a difendere lo
status quo. Il secondo e' che il sostegno parlamentare venga
meno al governo qualora questo dovesse risentire sul fronte
della popolarita' causa le misure di austerita' varate sino ad
ora. "La minaccia che queste dinamiche politiche portino
l'Italia o la Spagna a deviare dal loro cammino annunciato
di riforme - conclude Goldman - rappresenta l'elemento
centrale da monitorare sotto questo aspetto".
cop
Noooo Goldman Sucks noooo.
Vendere vendere vendere
carib
rerum cognoscere causas
L'unica obiezione possibile.. é che se passa una PSI 15+30.. che vale 30..
i titoli che oggi quotano 20 possono risalire.
da 20 a 30.. l'upside é del 50%..
PASTELLETTO
Guest
Vendere vendere vendere
Uscire tutti e quando dico tutti...
[ame=http://www.youtube.com/watch?v=-y9jDSpHFL8]Gary Oldman - Voglio dire Tutti!!!.mpg - YouTube[/ame]
Nobody's
Γένοιο οἷος εἷ
discipline
Guest
Da altro forum, probabilmente l'esiguità degli scambi non ha alterato significativamente la distribuzione.
Ultima modifica di un moderatore:
carib
rerum cognoscere causas
Da altro forum, probabilmente l'esiguità degli scambi non ha alterato significativamente la distribuzione.
Manca la BCE
GiveMeLeverage
& I will remove the world
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