DIE ZEIT & the Greek Debt: What a hairy mess, again… tagged: , , , , , , , , , ,

DIE ZEIT & the Greek Debt: What a hairy mess, again…

Posted by keeptalkinggreece in Economy

Statements,claims, denials and speculations on Greece’s debt volume repayment extension, debt restructure and possible debt haircut are creating in fact a confusing hairy mess similar to the state of one meter long hair extension after a wild night. No matter how patiently you comb it, you don’t through the hair mess….

After statements and denials by Greek government officials on the amount of debt to be included on the repayment extension issue, German weekly DIE ZEIT adds its own SP&SP* sauce to the mess.

The German government is considering a plan that would allow the Greek government buying back its own devalued bonds, using subsidized credits from the European Financial Stabilization Facility (EFSF), wrote DIE ZEIT without saying where the information came from.

The German government could approve such an offer in return for new commitments by Greece to a “stability-oriented policy”, said the newspaper on Wednesday.

Die Zeit also said Berlin is no longer opposed in principle to increasing the means at the EFSF’s disposal. Although the facility is backed by EUR440 billion in guarantees, it in practice can only lend just over EUR255 billion without jeopardizing its AAA rating.

The newspaper said it expected any deal on the matter to be decided at an EU summit on March 24-25. A meeting of EU finance ministers earlier this week discussed the expansion of the EFSF but took no firm decisions, according to WSJ.

Moreover the newspaper created a markets confusionand prompted claim dismissals by politicians from both countries, long before the article was published in its printed issue that normally comes out  Thursdays.

German, Greek Reactions

Greek Deputy Minister of Finance, Filippos Sachinidis dismissed the DIE ZEIT claims stressing  that Greek government’s position remains unchanged and there no such discussions going on, Greek media reported.
Additionally, a German finance ministry spokesman in an e-mail to Reuters, stated that Germany is not preparing a restructuring of Greek debt, adding that “the report in Die Zeit used the word “Umschuldung” which could refer to either a restructuring or a rescheduling.” ( Damn internet translations!)
  
The developments in Greece need to be closely monitored said a German government spokesman to Reuters, adding that Greece is on a difficult path. German Finance Ministry sources say that officials are working on contingency plans to handle the fallout if Greece defaults or needs to restructure its debt, according to Reuters.
 

Greek Bonds Suffered over DIE ZEIT claims

Greek bonds fell after Die Zeit reported that Germany is considering a plan that would help the Mediterranean nation buy back its own securities.

 Greek bonds pared their losses after Germany’s finance ministry denied it was working on a “restructuring” of Greek debt.

The Greek 10-year bond yield was seven basis points higher at 11.36 percent at 1:09 p.m. in London. It earlier rose as high as 11.66 percent. The extra yield, or spread, investors demanded to hold Greek bonds instead of similar-maturity German bunds widened 12 basis points to 8.45 percentage points, according to Bloomberg generic data.

“Any talk of adjustments generally makes the market nervous,” said a markets analyst (read full story in Bloomberg)

The  Greek Drama of Statements

On Monday,Greek deputy Prime Minister Theodore Pangalos said  that the government favours possibly extending the repayment period for the country’s outstanding debt, beyond its EU/IMF bailout loans. “Debt repayment extension may refer not only to the 110 billion euros (of emergency EU/IMF funding) but the entire debt,” Pangalos told Greek private television channel. He says this could help the country overcome its financial crisis.

An extension of the total debt refers to a debt restructure, of course. Panaglos’ statement prompted Government spokesman to calm down things and dismiss the claims of his fellow official. 

“The government has a specific point of view on this issue…. Of course, there is no question about extension of repayment of the total debt”, said  Government spokesman Giorgos Petalotis.

Some Greeks wondered whether Pangalos was just a messenger of a future debt restructure…

 * SP&SP sauce: Spicy and Speculative Sauce

Good article on DIE ZEIT  issue by Spiegel online : Emergency Plan for Greece/Bundesregierung erwägt Umschuldung (Federal Government considers Restructuring ( In German, though)