Greek bond swap begins as Germany voices doubts over bailout

The Telegraph ^ | 2/24/2012 | Louise Armitstead

[bruinbirdman]

Athens has launched the biggest sovereign bond restructuring in history to cut its debt by €107bn (£91bn) – amid warnings from Germany that even if it were successful, there were “no guarantees” Greece could be rescued.

The Hellenic Ministry of Finance on Friday released the highly anticipated offer document, firing the starting gun on a colossal effort to find Greek bondholders and persuade them to participate in a €206bn debt swap. Athens needs bondholders to agree to the deal within days as part of its effort to unlock the €130bn bail-out funds needed to avert default on March 20.

Wolfgang Schaeuble warned that the bailout, which was agreed late on Monday night, might not work. In a letter to German politicians, the finance minister said: “It may also not be the last time the German Bundestag will have consider financial aid to Greece. However, the chances of success with alternatives appear to me to be significantly lower at the current time.”

Before heading to the G20 finance ministers’ meeting in Mexico this weekend, Mr Schaeuble suggested he was prepared to consider combining the eurozone’s two bailout funds, the European Financial Stability Mechanism (EFSF) and the European Stability Mechanism (ESM), to protect Spain and Italy.

Lucas Papademos, Greece’s technocrat interim prime minister, chaired a cabinet meeting on Friday afternoon that approved the deal after the Greek parliament voted it through on Thursday evening. “We are making a titanic effort to secure financial support for the country,” said Mr Papademos as he left the meeting.

Bondholders will be asked to voluntarily take a 53.5pc hit on their bonds by swapping them for new instruments worth 46.5pc of their current value.

Bondholders will receive two-year bonds issued by the EFSF and new Greek bonds that will mature over 20 years

[rawhide]

On Thursday night the Greek parliament approved new collective action clauses (CACs) for the deal, which will make the acceptance of the tender by the majority of bondholders automatically binding on the others.

[Monitor]

Bondholders will be asked to voluntarily take a 53.5pc hit on their bonds by swapping them for new instruments worth 46.5pc of their current value.

Man, that's not a haircut, that's a voluntary castration!

[pepsionice]

One of the best stories I’ve heard out of Greece in past six months....had to do with gov’t health insurance drugs.

They had a pharmacy guy who had a couple of folks who needed insulin. Course, no one in Greece manufactures insulin (it ought to make you wonder why). In previous years....the pharmacy would order a shipment out of Europe, on credit, and provide to the consumer with the doctor’s note. The European company would get their money in approximatey 90 days after delivery.

Well....things have changed. The European companies wanted cash or electronic credit....before they’d ship now. So here was the pharmacy guy calling his customers, and asking them to come by and pay him cash. The common Greek guy was already being squeezed with late payments for his social security or late payments from his teaching job....so he’d have to flip his budget and cough up cash to cover this. The payment back from the gov’t? No one was sure...it might be the typical 90 days before the consumer got his money....maybe 180 days. The curious thing was that the pharmacy had few if any drugs...I’m guessing strictly what was manufactured in Greece, and you couldn’t buy anything unless you paid cash.

[wiggen]

That’s if they can pay in the end. I think unlikely since their economy is still contracting so its going to get worse.

[KarlInOhio]

It's like having a crystal ball for our future.

[William Tell]

"... the acceptance of the tender by the majority of bondholders automatically binding on the others."

Isn't Greece considered the "birthplace of democracy"? We're seeing democracy in action.

I'm glad we have a Constitutionally limited republic. What a relief.

[Oatka]

Bondholders will receive two-year bonds issued by the EFSF and new Greek bonds that will mature over 20 years.

Reminds me of a guy at a gun show who said he had a dog worth $1,000. He knew it was worth that much because he had traded two $500 cats for it.

Here's an interesting snip from a Socialist website that could be applied to the U.S. (wheat amidst the chaff):
"The purpose of the so-called “aid packages” for which The Greek population must sacrifice is not to help the people, but to enrich the banks, hedge funds and speculators."

the rest is HERE.

[bruinbirdman]

"to enrich the banks, hedge funds and speculators." "

One would suppose the Greeks and socialist complainers are happy that Greek banks are all now bankrupt along with their country.

yitbos

[M Kehoe]

Why did I think about dominoes when I read this article?

5.56mm