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All Eyes On Greek PSI

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….


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  1. Well, there is this:

    “However, Germany did make Greek gold subject to confiscation in the latest bailout proposal by the Troika.

    Greece is foolish to accept this parasitic offer of “help”. Greek gold reserves may be the only thing that prevents all-out hyperinflation and complete destruction of currency when Greece returns to the drachma.”

    “In the fine print of the 400-plus-page document — which Parliament members had a weekend to read and sign — Greece relinquished fundamental parts of its sovereignty to its foreign lenders, the European Commission, the European Central Bank and the International Monetary Fund.

    “This is the first time ever that a European and probably an O.E.C.D. state abdicates its rights of immunity over all its assets to its lenders,” said Louka Katseli, an independent member of Parliament who previously represented the Socialist Party, using the abbreviation for the Organization for Economic Cooperation and Development. She was one of several independents who joined 43 lawmakers from the two largest parties in voting against the loan agreement.

    Ms. Katseli, an economist who was labor minister in the government of George Papandreou until she left in a cabinet reshuffle last June, was also upset that Greece’s lenders will have the right to seize the gold reserves in the Bank of Greece under the terms of the new deal, and that future bonds issued will be governed by English law and in Luxembourg courts, conditions more favorable to creditors.” NY Times

  2. 85.8%, congratulations, that’s impressive! Say what you will about Venizelos, but he actually delivered a result. And that sure wasn’t easy. He’s still a bit too much of an “old guard” politician for my liking, that battle scarred powerhorse of PASOK, but at least he’s really working for his salary. Respect.