John Ward – BREAKING….Athens Circa 10% Short In Greek Law Sector, Hedgies ‘Confident’ They Can Trigger Insurance – 8 March 2012

“No no no,” screamed Oedipus the Hedgie


Berlin and Frankfurt less than impressed

Sources in European credit management were claiming early this morning that, as suggested here yesterday, the Hedge Fund sector of the credit-swap bondholder haircut may well be in a position to at least embarrass Athens, and probably seal its fate. Following Louise Armitstead’s late piece at the Daily Telegraph website last night, at 3 am GMT today Greek officials expressed confidence, and the Wall Street Journal felt the deal would go ahead. But this is not the view of some European credit suppliers – and  Banking News Greece (BNG)  is now also running an acceptance breakdown that suggests there is trouble immediately ahead for Evangelos Venizelos the Greek finance minister.

As always, where you wind up depends on the English Law segment (mainly Hedge Funds) and the quorum achieved….and whether you believe the numbers in the first place. But The Slog’s European sources suggest that total participation in the swap will be at or around 74%. They estimate Athens to be around 43 billion euros short of the 209 billion euros in play – or circa 16% short of the 90% they need to avoid using CACs.

“The Hedge Funds I know are relaxed,” said one, “you might even say ‘confident’ in some cases”. Allegedly there had been some informal HF discussions about approaching Athens to finesse the deal on offer, but the likelihood of this seems to have faded during yesterday. Hedgies were reportedly still paying 40% face value to build blocking stakes yesterday.

I am also told that neither Berlin nor Frankfurt are happy with the result. Calulations are continuing based on percentages of percentages once the final quorum is known, but I understand that the Chancellery feels nothing under 80% participation will be enough to keep the German banking fraternity onside. Chancellor Merkel is also said to be ‘deeply concerned’ about rising bond yields in general, and the Portuguese financial situation in particular. As I made clear in my post last night, the feeling continues to grow among the German elites (with continuing pressure from Washington) that amputating Greece would be manageable, but amputating ClubMed would be impossible. They are not wrong.

Meanwhile, ever vigilant for further chances to reduce confidence in the deal, Wolfgang Schauble, told the media he had discussed with Greece’s finance minister Evangelos Venizelos about whether it “would be better for the country to leave the euro”.

The Telegraph’s overnight column notes that ‘ at the European University Institute in Italy, Mr Schaeuble said he had discussed the issue “very openly” with Mr Venizelos. “Maybe you could say it was the wrong decision for Greece to join the common European currency,” Mr Schaeuble said. “Greece has failed for a long time to deliver what is needed to be in a common currency.”’

The Slog retains its position: this process is not meant to succeed, and its credibility is on the wane.

Hat-tips to Louise Armitstead and Slogger Anne for enlightenment and elucidation. You can view all the numbers at, but I should warn you that the Google transation is, always, amusingly impenetrable. And the figures I’m using here are (he wrote arrogantly) I suspect more reliable.

Related: the dilemma of a Fiscal Union including Greece link to original article


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