Greece Extends Bond Buyback Deadline

Friday was the alleged "deadline" for the Greek bond buyback. However, as I stated at the time:

"Note the use of the word "expected". Doubtless if insufficient bondholders have come forward the deadline will be extended."

Unsurprisingly, the deadline has indeed been extended to noon GMT Tuesday, in the hopes of selling another Euro3-4BN of bonds.

D Day For Greek Bondholders

Today is D Day for those who wish to sell their Greek bonds.

As per the Hellenic Republic Ministry of Finance:

"The invitation is expected to expire at 5:00pm, London time..The expected settlement date of the invitation is 17 December 2012."

Note the use of the word "expected". Doubtless if insufficient bondholders have come forward the deadline will be extended.

Wheels Fall Off Greek Bailout Plan

Unsurprisingly the wheels have fallen off the Greek bailout plan.

For why?

Eurozone banks do not want to take the losses that will arise from the Greek bond buyback plan.

The IMF will not release the next tranche of bailout money until the Eurozone delivers on the bond buyback plan.

See the problem?

Greek Bond Auction Falls Short

Greece's t-bill auction fell Euro1BN short of raising the Euro5BN due for Friday's bond deadline, although it was almost Euro1BN above its target.

However, it may well manage to sell some more and make up the shortfall before then.

Greece Faces D Day - Again

Today Euro of Greek bonds mature, next Friday 16th November a further Euro4BN mature.

Greece has issued, as it often does, a warning that if it dopes not receive bailout money by then it may default on those bonds.

However, Wolfgang Schaeuble, Germany's finance minister, is not so easily cowed by these threats; he told reporters yesterday that a decision on Greece next week "would be too soon".

Thus, as ever, the Eurozone crisis drags on as the politicians and bureaucrats dither over whether to continue to fund Greece or expel it.

Beware The Dead Cat Bounce

Markets are rising on the self delusional hopes that "this time" the ECB really will do something tangible to stop the rot, and will buy bonds willy nilly.

Be warned, this is nothing more than a dead cat bounce based on the false delusion of ECB action.

Repeat after me:

- There is no plan
- There never was a plan
- There will never be a plan

Spanish Bonds Now Junk

Spanish bond yields have hit an unsustainable 7%, ie they have become junk.

It is as though the "bailout" of last Sunday never occurred!

Greece's Ever Flexible "Deadline"

On 2nd April I wrote the following:

"Oh, that's easy, Greece has yet again postponed the "deadline" (from 4th April) to 18 April!"

Well I was a little ahead of events, and was two days out on the the date.

Today Greece has announced that it has indeed postponed the deadline for remaining bondholders to accept a debt swap, the new "deadline" is 20th April.

Ever flexible "deadlines" are the tools of fools, conmen and dreamers. 

Greek Bonds Worthless

The Bundesbank announced yesterday that it will refuse to accept Greek, Irish or Portuguese sovereign/bank bonds; ie it will cease to lend to commercial banks that use Greek, Irish or Portuguese bonds as collateral. As ekathimerini points out:

"It also means that the credibility of the new bonds issued is no different to that of the old ones they have replaced."

This effectively kills the European peripheral bond market and, by definition, the current structure of the Eurozone.

It is now only a matter of time before Greece, and other peripheral nations, leave or are kicked out of the Eurozone.

Oops! Greece Gets Its Dates Wrong

The PSI participation in foreign law Greek bonds was a meagre 69%. Greece has now extended the deadline for participation to April 4th.

Unfortunately, before then, on April 2nd there is a payment due on some bonds relating to Greek railways.

Was not the whole point of this exercise was for the swap to have been finalised so that bailout conditions were met before bills were due?

Oops!

Greece Defaults

As expected, the "voluntary" take up of new Greek bonds for old has not reached the 90% threshold necessary for it to be considered "voluntary".

85% of Greek holders of bonds (bound by Greek law) agreed to the deal (ironically the Greek Finance Ministry employees' pension fund was among those that did not agree to a "voluntary" participation), whilst only 69% of non-Greek debt (bound by English law) participated. Needless to say Greece has attempted to move the goalposts on the latter, by extending the period for participation to March 23 (yesterday they denied that they would do this).

Whatever the fiddles and fudges that Greece now attempts, the fact remains that the 90% threshold has not been reached and that CACs will have to be used; ie Greece has defaulted.

For form's sake Isda has announced that its determinations committee will meet at 1pm GMT today, to discuss a potential credit event in Greek CDS. 

After that the whole process will be mired in litigation.

Oh, and by the way, does anyone really believe the figures announced by Greece?

Only when they are fully audited by a genuinely independent person/organisation may we have any real faith in the numbers.

Here is a link to the full press release from the Hellenic Republic Ministry of Finance (for what it is worth).

Deadline Day For Greek Bond Swap

Today is Deadline Day for the Greek bond swap, creditors have until 20:00 GMT to accept the deal.

However, for reasons best known to the Greek government (perhaps something to do with disruption being caused by today's solar flares?), the announcement about the outcome of the deal won't be made until 06:00 GMT Friday.

The hype, spin and misinformation continues as Greece and the Eurozone continue to talk up the prospects of a successful deal. The latest figures being bandied about suggest that there will be a 75% take up, ie 25% of bondholders have not agreed to the deal (it is speculated that hedge funds are actually buying blocking stakes). This will mean that CACs will have to be used, and Greece will officially default (as the deal will not count as "voluntary").

Aside from the legal technicalities, wrt percentages and CACs, there are also the political nuances. Anything short of 80% will be considered by the Germans as being a failure.

Oh, and irrespective of the "success" or otherwise of this deal, the grim financial reality that Greece faces was highlighted this morning by today's unemployment figures that show that 21% of the workforce were unemployed in December (youth unemployment now stands at over 51%!).

Denials and Silence Speaks Volumes

Thursday, in theory, is the deadline for Greece's bond swap (where private sector investors will take a 75% haircut).

Despite the hype being spewed forth by Greek authorities, and those with a vested interest in seeing the deal go through (ie the institutional investors), Greece has been forced to deny rumours that Thursday's deadline may be moved back. Unsurprisingly no one actually believes that the deal can take place without CACs (collective action clauses) being triggered.

The hedge funds have most to gain from CACs being triggered and Greece being declared in default. Hence, hype about IIF's accepting the deal is irrelevant.

The silence of the hedge funds, and the denials about a postponement of Thursday's deadline speaks volumes.

Moody's Downgrades Greece

Unsurprisingly Greece has been downgraded by another ratings agency. Moody's has cut Greece's sovereign debt rating to the lowest possible level (from C to Ca).

The Ca rating means that the bonds are classed as being in "default".

Moody's are of the view that there is both a "distressed exchange" and "outright default".

Meanwhile, it is evident that (despite what some may claim and hope), the markets do not believe that the bailout is going to work, Zero Hedge reports the following:

"Nevertheless numerous hedge funds have been accumulating a range of Greek bonds that are governed by foreign law in the hopes of of making a legal challenge."

The media will soon begin to leak details of the actual participation rate, this is very likely to be below the percentage in the hype being spewed forth by the politicians.