Greece Bondholders May Lose Euro 200Bn

[Deckard]

Greece Bondholders May Lose $265 Billion as S&P Sees 70% Loss

April 28 (Bloomberg) -- Holders of Greek bonds may lose as much as 200 billion euros ($265 billion) should the government default, according to Standard & Poor’s.

The ratings firm cut Greece three steps yesterday to BB+, or below investment grade, and said bondholders may recover only 30 percent to 50 percent of their investments if the nation fails to make debt payments. Europe’s most-indebted country relative to the size of its economy has about 296 billion euros of bonds outstanding, data compiled by Bloomberg show.

The downgrade to junk status led investors to dump Greece’s bonds, driving yields on two-year notes to as high as 19 percent from 4.6 percent a month ago as concern deepened the nation may delay or reduce debt payments. Prime Minister George Papandreou is grappling with a budget deficit of almost 14 percent of gross domestic product.

“It’s now not just market sentiment, but a top rating agency sees Greek paper as junk,” said Padhraic Garvey, head of investment-grade strategy at ING Groep NV in Amsterdam.

Before yesterday, Greece’s bonds had lost about 17 percent this year, according to Bloomberg/EFFAS indexes. The 4.3 percent security due March 2012 fell 6.54, or 65.4 euros per 1,000-euro face amount, to 78.32.

Relative Ratings

S&P’s reduction of Greece puts the nation’s debt on par with bonds issued by Azerbaijan and Egypt. Moody’s Investors Service rates Greece A3, while Fitch Ratings puts it at BBB-.

The turmoil comes as European Union policy makers struggle to agree on measures to ease the panic over swelling budget deficits. Leaders of the 16 euro nations may hold a summit after the Greek government’s decision last week to tap a 45 billion- euro emergency-aid package failed to reassure investors, a European diplomat and Spanish official said.

German Chancellor Angela Merkel said she won’t release funds for the indebted nation until its government has a “sustainable” plan to reduce the deficit.

The reduction may force investors who are prevented from owning anything but investment-grade rated bonds to sell. S&P indicated the downgrades may not be over, assigning Greece a “negative” outlook.

Have most European banks now dumped or hedeged their holdings of Greek govies?

If they have, a Greek default or debt restructuring may not have the catastrophic, armageddon-like effects most commentators feared at the ouset of the crisis.

Comments?

[Bloo Loo]

Greece Bondholders May Lose $265 Billion as S&P Sees 70% Loss

Have most European banks now dumped or hedeged their holdings of Greek govies?

If they have, a Greek default or debt restructuring may not have the catastrophic, armageddon-like effects most commentators feared at the ouset of the crisis.

Comments?

how can you hedge against the ultimate security?

answer...you cant...but dont let Goldmans Advice that you can get in the way.

cuorse, the way bankers will survive this is exactly the same as they did when their own bonds failed....they lied about the value...keeps the books tidy.

[deflation]

A friend of mine has a brother working and living in Greece as a carpenter. When TSHTF, cash jobs dried up as regulations clamped down (or tried to) on tax evasion. Now, there's more cash-in-hand jobs as people remove their money from the banks to spend it before it goes.

A lot of it is going to the Greek side of Cyprus. In the €since 2008 and a Commonwealth country don't forget so possibly safer? I'm not so sure.

[interestrateripoff]

How much of these losses are insured by AIG?

[Bloo Loo]

A friend of mine has a brother working and living in Greece as a carpenter. When TSHTF, cash jobs dried up as regulations clamped down (or tried to) on tax evasion. Now, there's more cash-in-hand jobs as people remove their money from the banks to spend it before it goes.

A lot of it is going to the Greek side of Cyprus. In the €since 2008 and a Commonwealth country don't forget so possibly safer? I'm not so sure.

when a currency is no longer acceptable, people trade in skills, food and PMs.

[Bloo Loo]

How much of these losses are insured by AIG?

none..AIG have no money.

[Realistbear]

Greece Bondholders May Lose $265 Billion as S&P Sees 70% Loss

Have most European banks now dumped or hedeged their holdings of Greek govies?

If they have, a Greek default or debt restructuring may not have the catastrophic, armageddon-like effects most commentators feared at the ouset of the crisis.

Comments?

Losses and debt are good, gains and profits are bad.

The collapse and fall of Greece will be a nice earner for the banksters and politicos "in the know."

Funny thing, one of my favourite films of all time is "The 300" and the very true story of how Greece (Sparta) prevented the take over of "Europa" by the Persians around 300BC. JUst think, if the Greeks hadn't turned back the Persians we might all be under Sharia law today. What gratitude is it to them that we stand idly by and allow the banksters to pick over the carcass of the former saviour of Europe?

[interestrateripoff]

when a currency is no longer acceptable, people trade in skills, food and PMs.

You think that Gordon is tradeable?

Would you accept him as payment?

[Bloo Loo]

Losses and debt are good, gains and profits are bad.

The collapse and fall of Greece will be a nice earner for the banksters and politicos "in the know."

Funny thing, one of my favourite films of all time is "The 300" and the very true story of how Greece (Sparta) prevented the take over of "Europa" by the Persians around 300BC. JUst think, if the Greeks hadn't turned back the Persians we might all be under Sharia law today. What gratitude is it to them that we stand idly by and allow the banksters to pick over the carcass of the former saviour of Europe?

2000 years of grateful....thats a lot of grateful.

[Deckard]

Jeez guys, can we stay on topic for once?

This thread is not about Gordo/history/g0ld etc.

I asked a simple question: if Greece defaults on its debt or restructures it, do we think a few European banks will need to be nationalized, or not?

[Bloo Loo]

Jeez guys, can we stay on topic for once?

This thread is not about Gordo/history/g0ld etc.

I asked a simple question: if Greece defaults on its debt or restructures it, do we think a few European banks will need to be nationalized, or not?

not...let them bust.

[izzy]

Bonds, like all investments, involve an element of risk. The country cannot afford to pay. Bond holders should take a hit. Debt restructuring /default is the next logical step.

[interestrateripoff]

Jeez guys, can we stay on topic for once?

This thread is not about Gordo/history/g0ld etc.

I asked a simple question: if Greece defaults on its debt or restructures it, do we think a few European banks will need to be nationalized, or not?

Greek meltdown

Looks like this is an awesome catch 22, bailout Greece and rescue the banks or Greece fails and we have to bailout the banks.

It could get even more complicated, bailout Greece and save the banks which then causes a eurozone wide collapse in house prices needing a bank bailout funded by even more debt as no one has any money.

My comment from the greek meltdown thread.

I think it could be game over no matter what happens.

[blue skies]

Its the greek Banks that have been the big buyers of the Governments bonds.

Hmmm I gess that will be a double wammie for the country.

There banks busted and the government unable to help?

If I were in greece I would be putting my euro in Germany.

Surely the government will have to put in emergency measures?

[Bloo Loo]

What Greece needs is a really great international event to make them rich for years hence....like the OLYMPIC GAMES, constantly billed as a great investment for years and years of wealth ahead...

what? they had one? the one before China? 2004 you say??

better give UK till 2018 then.

[AteMoose]

EDITED

Edited April 28, 2010 by AteMoose

[Lepista]

wise move

damn, missed it. what did he say?

[Fromage Frais]

JUst think, if the Greeks hadn't turned back the Persians we might all be under Sharia law today.

Just to let you know islam is only just over 600 years old......Jews...Then...Christians...Then...Muslims

The battle of Thermopylae was in 480 BC......?

The Persians practiced Zoroastrianism which is a totally different religion.

It wasn't Gerard Butler vs Al Qaeda,

[Georgia O'Keeffe]

Just to let you know islam is only just over 600 years old......Jews...Then...Christians...Then...Muslims

The battle of Thermopylae was in 480 BC......?

The Persians practiced Zoroastrianism which is a totally different religion.

It wasn't Gerard Butler vs Al Qaeda,

Its a shame the spartans then fell to decadence,totalitarianism and butt fcking sounds like heaven compared to persian ideals

[leicestersq]

Greece Bondholders May Lose $265 Billion as S&P Sees 70% Loss

Have most European banks now dumped or hedeged their holdings of Greek govies?

If they have, a Greek default or debt restructuring may not have the catastrophic, armageddon-like effects most commentators feared at the ouset of the crisis.

Comments?

Not sure I follow your logic here. If you have hedged, it may mean that you dont take the loss, but someone else will.

The loss cant be eliminated, only moved to some other sucker.

[RufflesTheGuineaPig]

Greece Bondholders May Lose $265 Billion as S&P Sees 70% Loss

Have most European banks now dumped or hedeged their holdings of Greek govies?

If they have, a Greek default or debt restructuring may not have the catastrophic, armageddon-like effects most commentators feared at the ouset of the crisis.

Hedging wont solve the problem.

Hedging is just a bet.

There will still be someone on the losing side of that bet.

As with all these things, in the end, someone has to actually PAY/LOSE.

The opposite side of a lot of hedges, you are likely to find a lot of pension fund money.

[Deckard]

Hedging wont solve the problem.

Hedging is just a bet.

There will still be someone on the losing side of that bet.

As with all these things, in the end, someone has to actually PAY/LOSE.

The opposite side of a lot of hedges, you are likely to find a lot of pension fund money.

Hedging is not a bet, and if European banks have hedged their Greek exposure, then they are safe (save for CDS counterparty risk).

Who would they unload the risk to? To those investment banks who make a market for CDS contracts (the squid being one of them).

These investment banks started the whole thing buy buying CDS contracts, and are now squaring their books, by selling them back to the banks.

Same answer @ leicestersquare

Edited April 28, 2010 by VoteWithYourFeet

[Bloo Loo]

Hedging is not a bet, and if European banks have hedged their Greek exposure, then they are safe (save for CDS counterparty risk).

Who would they unload the risk to? To those investment banks who make a market for CDS contracts (the squid being one of them).

These investment banks started the whole thing buy buying CDS contracts, and are now squaring their books, by selling them back to the banks.

Same answer @ leicestersquare

so nobody can lose.

all AAA gold plated and perfect.

give us a break!!!!

[R K]

Hedging wont solve the problem.

Hedging is just a bet.

There will still be someone on the losing side of that bet.

As with all these things, in the end, someone has to actually PAY/LOSE.

The opposite side of a lot of hedges, you are likely to find a lot of pension fund money.

Hedging is an anti-bet according to Lord Blankfein.

He should know.

[Deckard]

so nobody can lose.

all AAA gold plated and perfect.

give us a break!!!!

You are getting confused here.

Of course many people will incur losses: individual bond holders and pension funds who did't or couldn't hedge their position will suffer.

Once again, this thread is about European banks: will they need to be rescued as a result of the PIIGS credit crisis, or did they manage to cushion the blow?

Oh, and before you reiterate that they should be let go: IMO that just isn't going to happen, right or wrong...