![]() Notably, the volume of CDS papers held by banks has been regarded as a time bomb. In recent months, financial markets have increasingly feared an uncontrolled spread of the Greek debt crisis to other eurozone countries and Europe's financial institutions. However, in the case of a "disorderly default", he warned, Greece would be stigmatized for much longer, making it more difficult to get re-financing from financial markets. The outlook for Greece would be better on lower interest rates and less debt servicing, leading to a speedier recovery of the country's debt rating," he said. "If the debt deal is voluntary, they appear willing to set Greece on a 'default rating' only for a preliminary period. In addition, US-based ratings agencies would "see a need to act," Jürgen Matthes, researcher at the Institute of the German Economy (IW), told DW. However, the move could be interpreted by financial markets as "disorderly default," said Hendrik Lodde, meaning that "claims from Credit Default Swaps would immediately become valid." ![]() Therefore, Athens on Tuesday published details of a draft law that included a so-called collective action clause to enforce participation by any reluctant investor. Under international finance laws, 90 percent of creditors must agree to the debt restructuring. "They would simply disappear from the market," he said, adding: "That is why some investors would rather like to see a genuine default on a non-voluntary basis."Īccording to a report in the German business newspaper Handelsblatt, the group of investors accepting losses voluntarily was not yet big enough for the debt deal to go ahead. Their investment would fail as "bond insurers make no payments if a restructuring agreement is reached voluntary," Hendrik Lodde, European bond analyst for DZ Bank, told DW. So-called hedge funds and other high-risk investors have taken out insurance against a Greek default by buying Credit Default Swaps (CDS), which would get them high payouts in case of a default. However, some investor groups are reluctant to reach an agreement. ![]() IIF said it hoped that all banks, investment funds and insurance companies, holding Greek debt, would join a deal "voluntarily", thus averting a disorderly Greek default and a complete writedown of their assets. The Institute of International Finance (IIF),which represents private sector bondholders in the negotiations, said the planned Greek debt swap is "the biggest ever restructuring of sovereign debt" it had dealt with. The deal is crucial in bringing Greece's debt burden back to a sustainable level by reducing it from currently 160 percent debt-to-GDP ratio to 120 percent by 2020. The debt swap will see Greek bondholders accept a writedown of 53.5 percent on their old Greek bonds. To make that happen, Greece now needs to forge a deal with private sector investors over the next few days. Greece will receive a package of loans worth more than 130 billion euros ($170 billion) and have about 107 billion euros of its debt written off. Yesterday the IMF called for a “full write-off” of €53.1 billion in the Greek loan facility if the economy contracted further with no payments for 20 years.Eurozone finance minister have a agreed a second bailout for Greece after marathon talks in Brussels, which ended late on Monday. There was no austerity they were willing to oppose and, indeed, most of the austerity was put forward by the Irish themselves.Ģ - Because we elect politicians to Government without the balls to go and represent us as a European equal - Remember the Enda Kenny pat on the head from Sarkozy.ģ - They are scared ************************less of the rise of SF who have consistently supported the Greeks and so are worried about their own electoral prospects as a consequence. Remember "Labour's way or Frankfurt's way". Why are they even opposing Greece in the first place?Īre they putting their own interests first before Ireland?ġ - Because they do not want to face up to the reality that they did absolutely nothing for Ireland in negotiations with the troika. This has been terrible news for official Ireland as their strategy for opposing Greek debt write down looks as if it will blow up in their faces. Yesterday the IMF called for a full write-off of 53.1 billion in the Greek loan facility if the economy contracted further with no payments for 20 years. Official Ireland - comprising of FF/FG/Lab/Renua, their lick arses in the media (bailed out Independent newspapers & RTE) and "independent" commentators - appear to have taken a noticeable hard stance on Greece.
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