Friday 9 March 2012


As quoted on Bloomberg

PSI Results:
  • 152billion out of 177billion of Greek law Eligible bonds tendered or voted yes in the consent solicitation.  9.3billion refused to give consent. This means that 16billion did not participate. We do not know how many of the 152billion actually gave only their consent without tendering their bonds. 
  •  Of the rest (foreign law, Greek loans) 69% or 19.5billion submitted tenders of exchange or consents. Again we do not know the breakdown
  • This brings the total tender plus consent to 83.5% 
  •  Once the CACs are activated the amount could reach 86.2%-100%. I say could, and I give a range because the Foreign law solicitation has been extended to the 23 march and bondholders can change their mind till then. It also depends on the CAC numbers for each bond. But a likely figure would be around 96%

Based on these results Greece in the statement says that intents to force the remaining 25billion of holdouts. Eurogroup would decide later today whether to activate the Greek Bondholder’s Act or not and then ISDA would decide if it constitutes a Credit Event that would trigger the CDS on Greece. Do not forget the activation only applies to the Greek Law bonds totalling 177billion. So since 152 exchanged then the activation would force 25billion. Out of this 25billion retail investors are thought to be around 5billion.

The foreign law invitation is extended till the 23rd of March and presumably bondholders have till 2 days before this deadline to submit or amend their votes. Failing that they can also appear in person at the office of Gotlieb and Stein (for English law) on the assigned date and time to vote (27th-29th March). For the CHF bond the meeting is in Zurich.

One more chapter in the Greek debt saga is nearing its end. The PSI restructuring would be declared a huge success and the markets would rejoice for the next few days as they would not have to deal with Greece for some time. The by far largest restructuring until the next one is completed. As we pointed out in previous notes, this does not solve the overall numbers problem in Greece. It gives however, political impetus to the process and is a signal that can be done to other countries. Events to follow:
  • Europe would now have to release the next portion of the bailout of around 130billion.
  • Thus we can switch our diet of souvlaki and tzatziki and turn to Portuguese Madeira wine, Irish black pudding and Spanish paella before we indulge in an Italian tiramisu. It would be a welcome change.
  •  PM Papademos would call his technocratic premiership a success since it achieved the main aim of completing the PSI. Most probably elections would be called for early May. This would be a new risk. The two major parties need to gather up close to 40% in order to have a coalition government. Currently, they poll around 36%. Even if they do get the required 40+ then the problem is that not many reform politicians exist in either of them to push the demands of Troika. Till then enjoy the other peripheral food.