Count down to zero
Just in in-tray
On 10 Jan, 2012, at 10:53 PM, Ha wrote:
At the moment I am in Greece to give a presentation at the World Universities Forum which is this year taking place in Rhodes. The forum is hosted by a local public university and I have never seen such a run down infrastructure: rotten cars on campus, rain pouring into the lecture halls, most walls covered with graffiti and posters calling for strike or even more (I cannot read Greek, but recognized hammer-and-sickle-symbols many times) etc. The guys from the US organising the forum said they even had to buy their own toilet paper since the Greek host university could not provide any.
On the other hand real estate prices are still up in the air (compared to the technical standards that are applied in construction). I talked with a re agent, but what he said seemed to me more like a fairy tale. However, you see many luxury cars in the streets and some quite expensive bars and tavernas are crowded also on weekdays.
Regards from Rhodes,
Ha
From: J
Sent: Tuesday, January 10, 2012 3:22 AM
Subject: Re: Comments - Week of January 9 - bear porn n greek coersion
In case u're interested in what's going on with Greece, the below might be of interest fm ubs
plus some bear porn from an outfit based in singapore
Subject: UBS FISC - Greek debt moves closer to coercive restructuring; EMU bond supply previews
Greek debt moves closer to coercive restructuring
* Today Dow Jones reported an unnamed troika official as saying that the Greek government will be “…retroactively introducing collective-action clauses, but not necessarily using them” via the legislative steps needed in order to “facilitate the negotiations with the private sector”. While there has been no confirmation or denial of this statement either from the Greek government or from the troika (of the EU, IMF and ECB), we expect that official and market discussion of CACs and further steps towards coercive restructuring will increase and intensify from this point onwards, leading to a coercive restructuring of some kind around the time of the 20 March bond redemptions.
* If we are correct in this view, the timing of the polemic over Greece turning increasingly towards coercive restructuring makes sense. On Monday of next week troika inspectors return to Athens to begin their next quarterly review and begin discussions over the details of Greece’s second aid package. Early-January was also the date by which the Greek government had expressed a desire to have completed negotiations with the private sector over the voluntary PSI as laid out in the 26 October EU summit statement.
* However, at the time of writing, it does not seem that a deal is close with the private sector, so the statements credited to the troika (which in a similar form also surfaced in the autumn) would appear to indicate the next – logical – steps on the part of Greek government. As we have stated in published research for some time, we believe that a voluntary PSI will likely not take place, owing to the difficulty of achieving sufficient investor participation, and that the negotiations will be abandoned in favour of a coercive move¹.
* With about 94% of its bonds governed by domestic law, the Greek state is in a position whereby it could change the terms its debt relatively easily in order to avoid a technical default within the rules of the bonds themselves. It could pass a law in its parliament which inserted collective-action clauses retroactively into the bond contracts, allowing the proposals of the Greek government to be imposed on all bond holders via the agreement of a certain proportion of bond-holders. In theory, there is no reason why this “deciding” proportion of bondholders would need to represent more than 50% of holders.
* The introduction of CACs in this way would not likely trigger a credit event in CDS contracts - at least in itself, as at that point the bondholder’s cash flows would still be theoretically unaffected. Instead, the CDS trigger would probably be the use of them in any subsequent restructuring.
* The framework for negotiation for the Greek government is provided to it by the 26 October EU leaders summit, in which a target of 120% debt/GDP by the end of 2020 was stated with a 50% haircut in the PSI the means to achieve that. However, with Greece missing on both growth and deficit targets, the need for deeper restructuring is continuous. As a result, we expect that the authority will be given to the Greek state for both a coercive restructuring, and – probably – a more extensive one from a decision to do so at another EU summit.
The treatment of Eurosystem holdings would be problematic
* In a coercive restructuring, the consequences of the treatment of euro area central banks could be negative either way. If, on the one hand, the bonds purchased in the Securities Markets Programme (SMP) suffer the same fate as those held by private sector investors, the political consequences of what would effectively be fiscal transfers of tens of billions of euros (whether there is a formal recapitalisation of central banks or not) might be problematic. If, on the other hand, euro area central banks are made whole (for example, by swapping the bonds in advance for cash or for new bonds), then the precedent of Eurosystem seniority may cause significant problems of contagion in the Spanish and Italian bond markets. Indeed, the more bonds bought in those markets for the SMP, the more investors might see themselves subordinated.
¹See Fixed Income Strategy Comment, 30 September 2011 and EBSP: 2012 European Rates Markets Outlook, 28 November 2011
Eurozone Government bond supply preview
* Holland will launch on Tuesday a new 3Y DSL 0.75% 04/15 for an amount of EUR 2.5-3.5bn. Given the large amount of bond issuance planned by the Netherlands in 2012 (EUR 60bn, EUR 8bn more than in 2011 after the Dutch debt agency announced plans for a significant reduction in short term debt funded by longer term issuance) we expect the amount issued to be at the top of the range announced. The bond will be sold through a regular tap auction.
* Dutch 3Y-10Y bonds underperformed swaps by around 10bp-15bp since the end of December, with the DSL 3.25% 07/15 currently trading at a z-spread of -48bp at a yield pick-up of about +15bp over the DSL 2.75% 01/15 which trades at a z-spread of -54bp. On Monday the new 3Y DSL was indicated on the grey market at a yield of about 90bp corresponding to a z-spread of around -48bp, implying a yield pick-up of +11bp over the DSL 01/15, thus putting the issue about 4bp cheap on the Dutch curve ahead of the supply.
* Due to the steepness of the Dutch z-spread structure compared to the German one, the bond looks cheap also vs. German paper in the 2015 maturity bucket as the current grey market valuation suggest a yield pick-up of about +48bp over the Bobl #157 2.25% 04/15, which is also trading 3-4bp cheap on the German curve.
* On Tuesday, Austria will also re-open the current 10Y benchmark RAGB 3.65% and the old 10Y RAGB 4% 09/16 for an overall EUR 1.2bn.
* The Austrian 10Y DSL 04/22 cheapened remarkably since the end of 2011, underperforming swaps by over 60bp as the market factored in negative implications for Austrian banks and the sovereign following the escalation of the crisis in Hungary. Nevertheless, the Austrian 10Y tightened by almost 15bp vs. swaps in the last trading session and is now trades at a z-spread of +102bp offering a yield of 3.38%. As a result, the bond currently offers a yield pick-up of +11bp over the French 10Y OAT 10/21 which now looks rich vs. the Austrian 10Y bond.
* The intermediate sector of the Austrian curve cheapened the most vs. swaps In the past two weeks, with the RAGB 4% 09/16 now yielding about 2.34% for a spread over swaps of about +70bp. The bond underperformed significantly on the Austrian curve and in particular vs. the shorter dated RAGB 3.5% 07/15, both outright and in ASW terms, over which it currently offers a yield pick-up of over +41bp while the pick-up over the OAT 5% 10/16 is just at around +3bp.
Visit our website at ubs.com
From: T
Sent: Tuesday, January 10, 2012 9:40 AM
Subject: Re: Comments - Week of January 9
While this is outside the normal topics for discussion, I pass it along anyway. We have Obama signing the NDAA on Dec 31, 2011, and the same month this is released. It appears to me that the government is as concerned about the citizens as they are any foreign/religious based terrorist.
info.publicintelligence.net
On Tue, Jan 10, 2012 at 8:07 AM, J wrote:
Does the imperial governing council compel its foreign bond holders to fill out such bothersome forms as it requires its plebs ?
What would the bond holders response be if bothered w/ such rule-by-making-up-laws tyranny?
Recommendation to the citizens, opt out by getting gold, ideally beyond reach of the empire, under sovereign protection of another nuclear-armed kingdom, which counts Switzerland out, and disqualifies Singapore.
news.yahoo.com
Sent from my iPad
On 10 Jan, 2012, at 7:55 AM, B wrote:
Along that line, and will no doubt delight any of you with US ties, the following, apparently new (or newly updated) for this year:
Caution, s/b read with expatriation or mind numbing nutritional supplements at hand:
irs.gov
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On Mon, Jan 9, 2012 at 4:47 J wrote:
The politicians do not lightly stiff bond holders because the politicians can more easily fool, stiff, twist, detain and persecute the tax payers, full stop. Just like the cow boyz choose to wrestle cows and bounce on bulls n horses, rather than bouncing on bob cats and duke it out with bears, the tax payers are easy marks.
Sent from my iPad
On 9 Jan, 2012, at 9:49 PM, G wrote:
I'm waiting for the first politician who figures out bondholders don't vote and slams them instead of the taxpayers who vote. I can't figure out why the politicians and bondholders don't understand when an investor buys bonds they are taking a bankruptcy risk.
On Jan 9, 2012, at 7:51 AM, M wrote:
First Detroit, then Illinois/California, then the US of A?
blogs.the-american-interest.com
And think of "roads to nowhere....."
youtube.com
M |
