Expectations on a successful Greek bond swap (PSI) are high, just a few hours before the official offer of the Greek state expires on Thursday night (2000GMT/ 8 pm local time). The Greek government seems optimistic. “It is going well, we are optimistic,” a Greek official told Reuters on conditions of anonymity. Optimistic about a big participation are also international media and the Euro rallies towards the US-Dollar.
Greek daily To Vima claims an 80% participation of the investors who obtained bonds according to the Greek Law. The total participation is apparently at 70%.
Finance Minister Evangelos Venizelos lashed out against these Greek pension funds that refuse to participate in the PSI. “What is the message we send abroad? When pension funds in Sweden and Austria participate in the PSI but Greek pension funds refuse to do so?”
So far five Greek pension funds (among them those of journalists and policemen) proved resistant to Venizelos appeal. should Greece decide to activate the collective actions clauses (CACs), as it has threatened to do, the bonds of these funds will undergo a ‘haircut’ as well. They own bonds worth at least two billion euro.
It’s not just Greek funds that refuse their participation. International hedge funds vehemently oppose a ‘haircut’ and even threaten to take legal action against Greece.
Whether the PSI target is achieved with a high participation or not, yet it will put the CDS on a test. The International Swaps and Derivatives Association (ISDA) is preparing for the case of a credit event and issued a preliminary list of obligations.
”The purpose of the list is to provide information as to the range of obligations that market participants believe may be deliverable upon the occurrence, and in potential settlement, of a credit event under standard credit default swaps for which the Hellenic Republic is the reference entity,” said ISDA in a statement.
Greece will announce the official results on Friday morning (0600 GMT/8 am local time).
Greeks will see a loan-load of 150-204 billion euro taken from the shoulders. This will not mean that they will be freed from contributing their last euro-cent to the state to repay its loans.
Optimism is also shown at the Athens Stock Exchange that is currently at +1.73%.
PS I don’t understand, why many do not share Venizelos’ optimism….