A great result for Greece
Greece announced the details of the largest sovereign debt restructuring in history this morning, with private sector bond-holders finally recognising that the deal on the table was probably a much better one than they were likely to get by holding out. According to a statement from the Greek government, the participation rate of investors in the debt swap was extremely high at 95.7%, no doubt encouraged by the threat of collective action clauses being imposed. Some EUR 152bln of Greek-law bonds were tendered, together with EUR 20bn of foreign-law bonds. Athens ought to be very pleased with this outcome. The aim of the restructuring exercise was to reduce the EUR 206bln of Greek debt held by the private sector by 53.5%, in order to put Greece onto a more sustainable debt footing. Importantly, high participation is a key condition for the EU to approve the EUR 130bln bailout. ISDA is set to meet later today to discuss this 'potential credit event'. Although the take-up has been well above expectations, the single currency has actually softened slightly, with some traders taking profits on long positions accumulated over the last couple of days. Apart from the way that the euro responds to this Greek debt-restructuring, observing how the bond markets of Europe's other fiscal miscreants perform over coming days will also be instructive. Despite some real concerns in recent weeks over the extent of private sector participation, in the end this outcome surpassed even the most optimistic expectations.
Also in today's Daily Forex Brief:
Also in today's Daily Forex Brief:
- Yen on the back foot once more
- Brazil backs more sober global outlook
- SNB faces a tougher year ahead.
No comments:
Post a Comment