About half of in­vestors would agree to roll over

Kathimerini English - - Business & Finance -

About 55 per­cent of in­vestors in Greek gov­ern­ment bonds would prob­a­bly vol­un­teer to roll over hold­ings of se­cu­ri­ties ma­tur­ing through 2013 to help the nation man­age its bud­get deficit, ac­cord­ing to ING Groep NV. If there was a 100 per­cent take-up of the pro­posal, Greece would save 15 bil­lion eu­ros in 2011, 33 bil­lion in 2012 and 29 bil­lion in 2013, “which would more than cover the gap be­ing left by not get­ting back to cap­i­tal mar­kets,” Padhraic Gar­vey, head of de­vel­oped-mar­ket debt in Am­s­ter­dam, wrote in an e-mailed note yes­ter­day. “In re­al­ity, the vol­un­tary take-up would likely be dom­i­nated by bank hold-to-ma­tu­rity port­fo­lios, Greek do­mes­tics and the Euro­pean Cen­tral Bank, which would mean a more likely vol­un­tary take-up of about 55 per­cent.” Greece, the re­cip­i­ent of a 110-bil­lion-euro Euro­pean Union and In­ter­na­tional Mon­e­tary Fund bailout just over a year ago, faces a po­ten­tial 30-bil­lion-euro fund­ing gap next year with yields on 10-year bonds at more than 16 per­cent keep­ing it shut out of debt mar­kets. Gar­vey es­ti­mates the ECB holds 45 bil­lion of the to­tal 255 bil­lion eu­ros of Greek gov­ern­ment bonds, with a sim­i­lar amount held by do­mes­tic in­vestors. About the same is held in banks’ hold-toma­tu­rity port­fo­lios, he said. The top 30 in­vestors in Greek debt, in­clud­ing loans, own 70 per­cent of the to­tal out­stand­ing, ac­cord­ing to Bar­clays Cap­i­tal. About 75 bil­lion eu­ros is held by cen­tral banks, of which 40 bil­lion is ac­counted for by the ECB, Bar­clays said in a re­search note yes­ter­day. (Bloomberg) don, and Ciaran O’Ha­gan, head of Euro­pean rate strat­egy in Paris, wrote in an in­vestor re­port yes­ter­day. “This would lead to an­other wave of rat­ing down­grades of non-core sov­er­eigns.” Any re­place­ment of ex­ist­ing se­cu­ri­ties with bonds that are given so-called pre­ferred sta­tus “may be a trig­ger for credit de­fault swaps on old Greek gov­ern­ment bonds, which Euro­pean Union pol­i­cy­mak­ers clearly want to avoid,” the an­a­lysts wrote.

(Bloomberg) Bloomberg sur­vey showed. All 51 econ­o­mists fore­cast the ECB to keep the bench­mark rate at 1.25 per­cent at the Thurs­day meet­ing. The Frank­furt-based cen­tral bank led by Jean-Claude Trichet may in­crease bor­row­ing costs by 25 ba­sis points in July, a sep­a­rate sur­vey showed. “Greek ten­sions will have only a lim­ited im­pact on the ECB’s de­ter­mi­na­tion to raise rates in July,” said Juer­gen Michels, chief euro-re­gion econ­o­mist at Cit­i­group in Lon­don. “The euro area as a whole is do­ing pretty well, there­fore the ECB will have to ad­just the bench­mark rate. It has to po­si­tion it­self not least to safe­guard its cred­i­bil­ity.” ECB coun­cil mem­bers in­clud­ing Italy’s Mario Draghi have sig­naled they see a need to raise bor­row­ing costs fur­ther to fight price pres­sures even as in­vestors be­come in­creas­ingly con­cerned that Greece may re­struc­ture its debt. (Bloomberg)

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