ΤΟ 2014 Η ΤΕΛΕΥΤΑΙΑ ΕΥΚΑΙΡΙΑ ΜΗΝ ΤΗΝ ΧΑΣΕΙΣ
Σάββατο 31 Δεκεμβρίου 2011
NAIAIAIAI! Κ. Παπούλιας: Το 2012 είτε θα πετύχουμε είτε θα αποτύχουμε οριστικά… ΓΕΙΑ ΣΟΥ ΠΡΟΕΔΡΑΡΑ! ΤΑ ΠΕΣ ΟΛΑ ΠΑΛΙ!
NAIAIAIAI! Κ. Παπούλιας: Το 2012 είτε θα πετύχουμε είτε θα αποτύχουμε οριστικά… ΓΕΙΑ ΣΟΥ ΠΡΟΕΔΡΑΡΑ! ΤΑ ΠΕΣ ΟΛΑ ΠΑΛΙ!
Αναρτήθηκε από τον/την olympiada στο Δεκεμβρίου 31, 2011
Η φυλετική ανωτερότητα του Έλληνα έναντι των άλλων λαών (κορυφαίο)
Η φυλετική ανωτερότητα του Έλληνα έναντι των άλλων λαών (κορυφαίο)
Αναρτήθηκε από τον/την olympiada στο Δεκεμβρίου 31, 2011
Πως να κάνουμε καμάκι σε μια ωραία γυναίκα?
Πως να κάνουμε καμάκι σε μια ωραία γυναίκα?
Το πώς να ρίξεις γενικά μια γυναίκα, είναι φαντάζομαι γνωστό. Την πλησιάζεις, λες δυο-τρεις ωραίες ατάκες και κατευθείαν στα χέρια σου. Αυτό που ανεβάζει το βαθμό δυσκολίας όμως, είναι αν η γυναίκα αυτή είναι αντικειμενικά όμορφη, γιατί ωραίες γυναίκες ίσον υψηλά στάνταρτς και συνήθεια στα κοπλιμέντα.
Με λίγα λόγια, μια όμορφη κοπέλα, δύσκολα θα κοιτάξει ένα μέτριο άνδρα και δύσκολα θα πέσει με μια καλή ατάκα. Άλλωστε τις έχει ακούσει πολλές φορές.
Μια όμορφη κοπέλα όμως θα κοιτάξει έναν πλούσιο άντρα για ευνόητους σε όλους λόγους. Τα παραδείγματα είναι άπειρα. Η “σωστή εργασία” το “σωστό επάγγελμα” και το “σωστό κοινωνικό status” είναι εξαιρετικά αφροδισιακά για οποιαδήποτε γυναίκα.
Η πρωτοτυπία είναι το παν για να ρίξεις μια καλλονή. Της έχουν αφιερώσει πολλά τραγούδια και της έχουν γράψει αμέτρητα ποιηματάκια σε χαρτοπετσέτες. Για να την προσελκύσεις φτιάξε το δικό σου πλάνο στο μυαλό σου και μην ακολουθήσεις την πεπατημένη οδό. Βρες έναν περισσότερο κινηματογραφικό τρόπο για να της αποσπάσεις την προσοχή, μιας και οι γυναίκες, οποιασδήποτε εμφάνισης, το θέλουν το ρομάντζο τους.
Οι κανόνες συμπεριφοράς όμως δεν αρκούν. Η περιποίηση του εαυτού σου παίζει σημαντικότατο ρόλο για να κερδίσεις μια όμορφη γυναίκα. Σκέψου, πως από τη στιγμή που έχει τσεκάρει και την παραμικρή λεπτομέρεια στον εαυτό της, είναι λογικό να το κάνει και σένα. Βασικό σημείο αποτελούν τα νύχια, μιας και τα χέρια είναι από τα πρώτα πράγματα που παρατηρούν οι γυναίκες, αλλά και τα παπούτσια που, όπως λένε, φανερώνουν αν ένας άνδρας είναι καθαρός.
Πέρα από την εμφάνιση, σημαντικό είναι να δείξεις την αμέτρητη αυτοπεποίθησήσου. Να δώσεις την εντύπωση της σιγουριάς στο βλέμμα σου και να μη συμπεριφέρεσαι με ύφος: “σε θέλω”, αλλά με ύφος: “με θέλεις”.
Επάνω στη συζήτηση, άσε την ίδια να ανακαλύψει μερικά πράγματα για εσένα και μην της τα αραδιάσεις όλα μπροστά της. Η αίσθηση μυστηρίου, σε συνδυασμό με τη συμπεριφορά ενός τζέντλεμαν, είναι αφροδισιακή για τις γυναίκες. Η παράθεση αμέτρητων πληροφοριών δείχνει αδύναμο και ανασφαλή χαρακτήρα και υποδηλώνει μια μορφή απελπισίας.
Η αυτοπεποίθηση σε αυτήν την περίπτωση μειώνεται και, όπως είναι λογικό, η γυναίκα δεν εντυπωσιάζεται. Άσε τη, λοιπόν, να προσπαθήσει και αυτή λίγο -μην αισθανθεί και τόσο βασίλισσα. Το καλύτερο είναι να υπάρχει ένας εξελισσόμενος διάλογος, του οποίου το θέμα θα έχεις διαλέξει εσύ, για να φανείς άνδρας με πρωτοβουλίες, κι από εκεί και πέρα βάλε το μυαλό σου να σκεφτεί έξυπνα πράγματα τα οποία δε θα της πεις με επιτηδευμένο στυλάκι.
Τέλος, πιο σημαντικό απ’όλα, ίσως, είναι να δείξεις ότι δε σου είναι απαραίτητηγιατί περιμένουν και άλλες στην ουρά. Δείξ’της ότι μπορεί αυτή να έχεις 100 υποψηφίους γαμπρούς, αλλά εσύ έχεις, έστω, 60 στο νυφοπάζαρο.
Μην παρακαλέσεις λοιπόν για προσοχή και για οτιδήποτε άλλο. Μη ζητήσεις αυτό που θέλεις, αλλά απαίτησε το με τον τρόπο σου.
ΣΥΓΚΛΟΝΙΣΤΙΚΟ: ΕΞΟΜΟΛΟΓΕΙ ΑΣΤΥΝΟΜΙΚΟΥΣ ΚΑΙ ΚΡΑΤΟΥΜΕΝΟΥΣ Ο ΗΓΟΥΜΕΝΟΣ ΕΦΡΑΙΜ ΜΕΣΑ ΣΤΗ ΦΥΛΑΚΗ!
30/12/11
ΣΥΓΚΛΟΝΙΣΤΙΚΟ: ΕΞΟΜΟΛΟΓΕΙ ΑΣΤΥΝΟΜΙΚΟΥΣ ΚΑΙ ΚΡΑΤΟΥΜΕΝΟΥΣ Ο ΗΓΟΥΜΕΝΟΣ ΕΦΡΑΙΜ ΜΕΣΑ ΣΤΗ ΦΥΛΑΚΗ!
Για ενδεχόμενο να αλλάξουν οι όροι περιορισμού του Εφραίμ έκανε λόγο ο στενός συνεργάτης του στην Κύπρο, Άθως Κοιρανίδης, ο οποίος τον επισκέφθηκε την Πέμπτη μαζί με τις αδελφές του ηγουμένου στον Κορυδαλλό.
Σύμφωνα με δηλώσεις του κ. Κοιρανίδη σε κυπριακά ΜΜΕ, υπάρχει ενδεχόμενο να αλλάξουν οι όροι περιορισμού του Γέροντα, ώστε να τεθεί υπό περιορισμό στη μονή Βατοπεδίου στο Άγιον Όρος έως ότου γίνει η δίκη του.
Εκτίμησε πάντως ότι οι ελληνικές αρχές δεν θα ασχοληθούν με οποιοδήποτε αίτημα πριν τα Θεοφάνεια, οπότε προβλέπεται, σύμφωνα με τις ενδείξεις, να περάσει και την Πρωτοχρονιά στον Κορυδαλλό. Με πληροφόρησε, όμως, ότι οι αστυνομικοί του συμπεριφέρονται πολύ καλά, με ευλάβεια και μάλιστα εξομολογεί και κόσμο -τόσο αστυνομικούς όσο και κρατούμενους!».
«Ο γέροντας ήταν πολύ ήρεμος», ανέφερε ο κ. Κοιρανίδης για τη συνάντησή του με τον Εφραίμ. defencenet.gr
ΣΧΟΛΙΟ HELLAS - ORTHODOXY: "ΠΕΡΙΕΡΓΑ" ΠΡΑΓΜΑΤΑ! Πώς είναι δυνατόν να δέχονται να εξομολογηθούν σε έναν "απατεώνα" όχι μόνο οι συγκρατούμενοί του, αλλά και οι αστυνομικοί;
Θα μας πουν οι κάθε λογής ξερόλες και...παντογνώστες (με κυάλια) που "γνωρίζουν" τον Γέροντα;
Ουδέν κακόν αμιγές καλού, έλεγαν οι αρχαίοι μας πρόγονοι: Έτσι λοιπόν, μπορεί να βρίσκεται φυλακή ο π. Εφραίμ, να συκοφαντείται και να υβρίζεται άδικα, ΟΜΩΣ ΑΚΟΜΑ ΚΙ ΕΤΣΙ ΩΦΕΛΕΙ ΤΟΥΣ ΣΥΝΑΝΘΡΩΠΟΥΣ ΤΟΥ!
"Περίεργα" αυτά για όσους βιάζονται να κατακρίνουν. Φυσιολογικά για όσους γνωρίζουν όχι μόνο τον συγκεκριμένο Γέρονται, ΑΛΛΑ ΚΑΙ ΤΟ ΜΕΓΑΛΕΙΟ ΤΟΥ ΧΡΙΣΤΙΑΝΙΣΜΟΥ ΓΕΝΙΚΟΤΕΡΑ!
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Tα δωράκια του Βενιζέλου ( στους .. γερμανούς !)
Tα δωράκια του Βενιζέλου ( στους .. γερμανούς !)
Αναρτήθηκε από τον/την Greekx στο Δεκεμβρίου 31, 2011
Collective Action Clause, Ρῆτρες Συλλογικῆς Δράσης
Collective Action Clause, Ρῆτρες Συλλογικῆς Δράσης
Collective Action Clauses (CAC’s henceforth) or Majority Action Clause have a long and varied history. According to Buchheit & Gulati[1] they were first introduced in English law by Palmer (1879). Their introduction served and serves a very real purpose and need. That of facilitating the restructuring or the amendment the (T)erms & (C)onditions of a Bond by the majority of Noteholders and to avoid rogue or malevolent holders of bonds holding at ransom both the debtor and other creditors. What are CAC’s (see Appendix for an example) and what purpose do they serve? Let me start with an example of how it might work.
Suppose that ACME a company that manufactures futuristic technology gadgets finds itself in the position of having a severe cashflow problem as one of its major clients Mr W.E.Coyote has not paid in time. ACME is unable to pay its bond liabilities at the agreed time. Consider further that most bondholders believe, after careful analysis of ACME’s product range, that the main business is sound and given time and perhaps some reorganization of the company’s management and client focus ACME would thrive and pay in full its bond liabilities. All that it needs is to amend some of the T&C of the bond, perhaps extend the maturity or move some coupons in the future andACME would survive. One bondholder, Mrs R.Runner for reasons of personal benefit or other, things differently. When ACME got into trouble Mrs Runner bought some of the bonds at discount with a view to either force ACME into liquidation or force a management change or simply to extract more money. Mrs Runner can do so since ACME bonds need the consent of 100% of Noteholders as there are no CAC’s that allow for the will of the majority to prevail. If on the other hand, ACME bonds included right from the start CAC’s specifying that a 75% majority is binding for all bondholders Mrs Runner would have needed at least 25% of the outstanding ACME bonds to see her sinister plans materialize.
As always, however, there is another side to the ACME story. It could be that the real villain is ACME and the victim is the unsuspecting small bondholder. ACME purposefully, introduced (at the start) CAC’s with a low majority threshold, say 50% (simple majority) with a view to make non-payment or restructuring fast and easy. ACME colluded with some bondholders to haircut the bond’s principal by 50%. ThenACME found some other way to compensate (recapitalize or sweeten) its friendly creditors.
Thus, CAC’s have two sides. Striking a balance between the real need to restructure a company and with the moral hazard it introduces is a fine art. Ultimately, any dispute in the motives would have to be resolved by courts. In fact, there have been cases where the majority has been overturned as it was not deemed to serve the interests of all bondholders. This means that even though CAC’s allow for the majority view to prevail, the minority bondholders cannot be ignored completely. After all, the original bond documentation contains an “unconditional promise to pay”.
One argument against the introduction of CAC’s in the bond documentation has to do with price and liquidity. Studies have concluded that the introduction of CAC’s in less creditworthy countries (lower rating) have an adverse effect on the price and liquidity. Namely, creditors demand a higher yield as they view the CAC’s from the moral hazard point of view. For borrowers of high rating CAC’s are viewed as a safety feature.
Europe and the Greek Case
One has to note that while in the case of corporates all countries have laws dealing with bankruptcy (Chapter 11 in US etc) the equivalent for sovereigns does not exist. There have been various attempts by IMF and others to formalize the process with various degrees of success. Introducing CAC’s is one way to ease and facilitate the speedy resolution of debt restructurings. It is for this reason the European Finance Committee[2] (EFC) in Europe welcome in April 2003 the implementation of CAC[3] in European Bond issuance. The Chairman of that committee was none other than Prof. Christodoulakis the then Greek Finance minister.
It may not come as a surprise that Greece never implemented CAC’s in its domestic bond issuance despite the apparent endorsement of the Greek Finance minister. If it had done so back in 2003 things would be very-very different now for Greece; for the better. In fact, Greece is the only country alongside Italy that it did NOT implement CAC’s in their domestic bond issuance. Italy’s formal claim was that it would affect the price and liquidity of its bonds. We do not know the reasons of the Greek non-compliance (after all the Chairman of the EFC was Greek!).
PSI and Greek Bonds
One can divide the Greek debt into two classes; those that are issued under Greek law (ISIN starts with GR….) and those that are issued under foreign law. Before the Greek bailout and the bilateral loans to Greece, around 90% of the Greek debt was under Greek law and jurisdiction. This percentage together with the advantage it conveyed to Greece is been eroded, as all the bailout loans are under English law. In fact, most of the Greek foreign law bonds are under English law and all of them contain some form of CAC’s. Some[4] require a 2/3 (66 2/3) majority while others[5] have a 75%. Even though restructuring these bonds is easier as they contain CAC’s they also offer much higher protection to the bond holders and as such they are traded at a premium to the Greek domestic bonds. This is because they also contain “Negative pledge” and “moratorium” clauses and also because any dispute would be decided in London and not in Athens courts. In fact some contain very poisonous clauses and it is a source of puzzlement why the Greek government has not attempted to obtain the requisite majority to either change these clauses or destroy the bonds.
For the Greek domestic bonds things are different. As mentioned above the Greek domestic bonds do not contain CAC’s and thus anyrestructuring that aims to avoid a Credit Event (Default) would require the consent of all bondholders. It is for this reason that the PSI was declared to be a voluntary proposal. Trying to secure a high participation was left to the gentle persuasion of politics and incentives. For an analysis of the current state of the PSI read “Should Santa bring PSI to the Greeks” (and in Greek here).
Should Greece introduce CAC’s to force PSI?
As it turned out, however, bondholders were not adequately incentivized to participate in the voluntary loss of more than half of their investment. In fact, the largest bondholder, the ECB, has flatly rejected any talk of participating in the PSI. Other bondholders see that as an opportunity to join the free ride (See “The thrills and joys of free-riding”).
It comes as no surprise that according to Greek press reports the Greek government is considering introducing CAC’s to force the holdouts to participate in the PSI.
Here we ask the question: “Is it prudent for Greece to do so? What are the pros and cons of such an action?
Let’s assume that Greece manages to come to some form of common ground with the IIF (representing the bondholders) and a bond swap is on offer. Namely, holders of the Greek bonds would tender their holdings and in return they would get some New Greek bonds and perhaps some cash. Assume further that only 65% participation is achieved. Greece being a sovereign state has the power to legislate at that point, that once the offer has been accepted by 65% it is binding for the rest 35%. It can further legislate that small (up to 100,000) private bondholders are immune. Greece certainly has the power to do it, but doing so is an event of default. This is because Greece changes unilaterally the Terms of already existing bonds to the detriment of the bondholders. This is where things get more complicated. Under the voluntary offer Greece would assume the status of “Selective Default” which is not really a default as it describes the period between making an offer and the acceptance of this offer. Now, however, the Greek government has caused a full blown default. It goes without saying that CDS’s would be activated, but this is only a political concern and not an economic. The outstanding net CDS volume is far too low to have any impact (around 3billion). The objection to the CDS comes mainly from ignorant or populist politicians. The main problem would come from Greece being placed under default and the litigation it would trigger. Furthermore it cannot discriminate in favour of the ECB. The ECB would have to oblige to the will of the Greek CACs. It also sets a very dangerous and unwelcome precedence for all bondholders of European debt. Holders of debt of third world countries factor in such a behavior when it comes to investing in their bonds. They do not expect this kind of behavior from European Union country. This would alter the perceptions, pricing and dynamics of European debt for many years. If on top, Greece discriminates positively against the official sector (ECB) it would deal a further blow to the credibility of the EU and its practices. Last but not least, Greece would enter a period of prolonged legal battles with disgruntled bondholders. This is paradise for the law firms who advice Greece as it would mean many years of high legal fees. Despite the fact that it would be difficult for bondholders to attach any Greek assets to their claims they can make life for the Greek government very difficult and possibly prohibit Greece from entering the international capital markets for many years unless Greece settles their claims.
In summary, introducing CAC’s to force the PSI would:
- Be a credit default event. One cannot see the logic of having a credit event just for participation in the PSI. It is like using a sledgehammer to kill a fly. If Greece decides to go down that route, they might as well legislate that all bonds become zero coupon.
- Greece would have to have the financial support and consent of the ECB and EU. Otherwise it would not survive the financial repercussions of an event of default.
- Trigger CDS
- ECB would have to take losses and possibly go bankrupt unless the Greek government positively discriminates the official sector and possibly small private owners. This would be a particularly bad precedent for Europe and would for sure be challenged by other bondholders.
- Greece would engage into hard and long legal battles as bondholders challenge this.Reputation of Greece as a debtor would be severely affected because of its behavior.
- Reputation of EU would also be affected as this is not what creditors expect from a member of the Union.
- Greece would set a very bad precedent for other European countries. The market would price accordingly other peripheral bonds.
- Greece would still need to borrow money to pay the coupons of the new PSI bonds. Estimates vary between 6 and 8 billion. As Greece is running a primary deficit it would need to access the markets or turn to the IMF/EU once more.
It is thus very hard to find anything positive to say about such an action. In fact the only beneficiaries of such an action would be the lawyers that advise Greece and would be defending Greece for many years with high fees. It would be a gross mistake for Greece and Europe to follow that path. Let us hope that the press reports are just empty threats aimed at naïve bondholders because the serious ones are already honing their battle axes and Greece is no match for them.
Appendix A. Example of CAC from Greek Bond XS0357333029
MEETINGS OF NOTEHOLDERS AND MODIFICATION
The Agency Agreement contains provisions for convening meetings of Noteholders to consider matters affecting their interests, including modification by Extraordinary Resolution of these Terms and Conditions or the provisions of the Agency Agreement. Such a meeting may be convened by the Republic and shall be convened by the Republic at any time upon the request in writing of the holder or holders of ten per cent. or more in principal amount of the Notes for the time being outstanding. The quorum for any meeting convened to consider an Extraordinary Resolution shall be one or more persons holding or representing not less than 66 2/3 per cent. of the aggregate principal amount of the Notes for the time being outstanding, or 25 per cent. of the aggregate principal amount of the Notes for the time being outstanding at any adjourned meeting. However, at any meeting, the business of which is to: (i) change the due date for the payment of the principal, premium (if any) or any installment of interest on the Notes;
(ii) reduce or cancel the principal amount or redemption price or premium (if any) of the Notes;
(iii) reduce the portion of the principal amount which is payable upon acceleration
f the maturity of the Notes;
(iv) reduce the interest rate on the Notes or any premium payable upon redemption of the Notes;
(v) change the currency in which interest, premium (if any) or principal will be paid or the places at which interest, premium (if any) or principal of Notes is payable;
(vi) shorten the period during which the Republic is not permitted to redeem Notes, or permit the Republic to redeem Notes if, prior to such action, the Republic is not permitted to do so;
(vii) reduce the proportion of the principal amount of the Notes whose vote or consent is necessary to modify, amend or supplement the Agency Agreement or the Terms and Conditions of the Notes;
(viii) reduce the proportion of the principal amount of the Notes whose vote or consent is necessary to make, take or give any request, demand, authorisation, direction, notice, consent, waiver or other action provided to be made in the Agency Agreement or the Terms and Conditions of the Notes;
(ix) change the obligation of the Republic to pay additional amounts with respect to the Notes;
(x) change this definition, the definition of “outstanding” contained in the Agency Agreement or the definition of “Written Resolution” set out below;
(xi) change the governing law provision of the Notes;
(xii) change the courts to the jurisdiction of which the Republic has submitted, its obligation under the Agency Agreement or the Terms and Conditions of the Notes to appoint and maintain an agent for service of process or the waiver of immunity in respect of actions or proceedings brought by any holder based upon a Note; or
(xiii) appoint a committee to represent Noteholders after an event of default occurs; (each a “Reserved Matter”), the necessary quorum will be one or more persons holding or representing not less than 75 per cent. of the aggregate principal amount of the Notes for the time being outstanding or not less than 50 per cent. of the aggregate principal amount of the Notes for the time being outstanding at any adjourned meeting. Resolutions may be duly passed as an Extraordinary Resolution at any meeting of the Noteholders or by Written Resolution and will be binding on all the Noteholders (whether or not they are present at such meeting and whether or not they may sign the Written Resolution) and on all Couponholders. An “Extraordinary Resolution” means a resolution passed at a meeting of the Noteholders duly convened and held in accordance with the provisions above by or on behalf of the holders of: (i) in the case of a Reserved Matter, at least 75 per cent. Of the aggregate principal amount of the Notes for the time being outstanding or at least 50 per cent. at any adjourned meeting of aggregate principal amount of the Notes for the time being outstanding, or (ii) in the case of a matter other than a Reserved Matter, at least 66 2/3 per cent. of the aggregate principal amount of the Notes for the time being outstanding or at least 25 per cent. at any adjourned meeting of the aggregate principal amount of the Notes for the time being outstanding. A “Written Resolution” means a resolution in writing signed by or on behalf of the holders of: (i) in the case of a Reserved Matter, at least 75 per cent. of the aggregate principal amount of the Notes for the time being outstanding, or (ii) in the case of a matter other than a Reserved Matter, at least 66 2/3 per cent. of the aggregate principal amount of the Notes for the time being outstanding. Any Written Resolution may be contained in one document or several documents in the same form, each signed by or on behalf of one or more Noteholders.
The Republic and the Agent may, without the vote or consent of any holder of the Notes, amend the Agency Agreement or the Notes for the purpose of: (i) adding to Republic’s covenants for the benefit of the holders of the Notes; or
(ii) surrendering any right or power conferred upon the Republic; or
(iii) securing the Notes; or
(iv) curing any ambiguity or curing, correcting or supplementing any defective provision in the Notes or the Agency Agreement; or
(v) amending the Agency Agreement or any of the Notes in any manner which
the Republic and the Agent may determine and which is not inconsistent with the Notes and does not in the opinion of the Republic adversely affect the interest of any holder of the Notes; or
(vi) correcting in the opinion of the Republic a manifest error of a formal, minor or technical nature; or
(vii) complying with mandatory provisions of law or any other modification provided that such modification is not in the opinion of the Republic materially prejudicial to the interests of the Holders. Any such modification, waiver or authorisation shall be binding on the Noteholders and any such modification unless the Agent otherwise requires, shall be notified by the Agent to the Noteholders as soon as practicable thereafter. For the purposes of (i) ascertaining the right to attend and vote at any meeting of Noteholders, (ii) Condition 10 (Meetings of Noteholders and Modification) of the Offering Circular and Schedule 3 of the Agency Agreement (Provisions for Meetings of Noteholders) and (iii) Condition 7 (Events of Default) and for purposes of determining whether the required percentage of holders of the Notes are present at a meeting for quorum purposes, or has consented to or voted in favour of any request,
demand, authorisation, direction, notice, consent, waiver, amendment, modification or supplement to the Notes or the Agency Agreement, or whether the required percentage of holders has delivered a notice of acceleration of the Notes, any Notes that the Republic owns or controls directly or indirectly will be disregarded and deemed not to be outstanding. For this purpose, Notes owned, directly or indirectly, by the Bank of Greece or any of the Republic’s local authorities and other local authorities’ entities will not be regarded as, or deemed to be, owned or controlled, directly or indirectly by the Republic. “Control” means the power, directly or indirectly, through the ownership of voting securities or other ownership interests or otherwise, to direct the management of or elect or appoint a majority of the board of directors or other persons performing similar functions in lieu of, or in addition to, the board of directors of a corporation, trust, financial institution or other entity. Before any request is made or notice is delivered or Written Resolution is signed by any Noteholder in accordance with the provisions of this Condition 10 or Condition 7, the relevant Noteholder must deposit its Notes with the Paying Agent and obtain two copies of an acknowledgment of receipt (an “Acknowledgment”) signed and dated by the Paying Agent and certifying the nominal amount of Notes so deposited. Any request so made, notice so given or Written Resolution so signed by any Noteholder must be accompanied by an Acknowledgment issued to the Noteholder. Notes so deposited will not be released until the earlier of (i) the thirtieth day after the date of deposit and (ii) the request, notice or Written Resolution becoming effective in accordance with these Terms and Conditions, and will only be released against surrender of a relevant Acknowledgment.
Greece could default on PSI negotiations
WEDNESDAY, 30 NOVEMBER 2011
Greece could default on PSI negotiations
Back in July 2011 the so called Greek negotiating team made a rather fundamental error when negotiating the original PSI. They engaged into the talks apparently unprepared and with a rather amateurish team. The result was an agreement that was later abandoned and declared dead only to be replaced by another PSI that also seems to be dead too. The Greeks appeared to have made another mistake which only betrays severe incompetence in the matter. They signed a clause that allows countries (Finland) to ask for collateral from Greece as a prerequisite for their financial support. Why was it a mistake? Because there are Greek bonds in existence that specifically prohibit Greece from giving any security unless they do so for everybody. If they do not give this security to everybody, then it would be a breach of the bond's covenants and possibly an "Event of Default". The negotiating team could have said to the Finland team that they cannot possibly give these guarantees as this would be an event of Default, which is something to be avoided and the case would have been closed then and there. That would have been the case of course, if anyone had bothered to read the legal documents that the Hellenic Republic had already signed. The fact that they did not object to it, shows that they had not done their homework going into a meeting that was to shape the country's future. Incidentally, for Bond aficionados the actual clause is called a "Negative Pledge". Let me give you an example from the Greek bond with ISIN XS0256563429.
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"So long as any Note remains outstanding, the Republic shall not create or permit to subsist any mortgage, pledge, lien or charge upon any of its present or future revenues, properties or assets to secure any External Indebtedness, unless the Notes shall also be secured by such mortgage, pledge, lien or charge equally and rateably with such External Indebtedness or by such other security as may be approved by an Extraordinary Resolution of the Noteholders (as described in Condition 10)."
So simply by reading the Offerings of the bonds they could have avoided a lot of trouble and the subsequent structuring of a special vehicle to handle this guarantees. Absurdly enough the Greek side seems to be repeating the mistake! (Τό δίς ἐξαμαρτεῖν οὐκ ἀνδρός σοφοῦ, "To commit the same sin twice is not a sign of a wise man.")
Greece negotiating directly the PSI could be an event of default.
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"(l) Moratorium
A general moratorium is declared by the Guarantor in respect of its External Indebtedness or the Guarantor announces its inability to pay its External Indebtedness as it matures or the Guarantor otherwise commences negotiations with one or more of its respective creditors with a view to a general readjustment or rescheduling of its respective indebtedness."
The Guarantor in this case is the Hellenic Republic and the bond was issued by the Hellenic Railways. Interestingly, apart from the Greek lawyers (that may claim ignorance), the international one is a very well known firm, that should have spotted this gross mistake in the Offering.
One could have stretched the argument up until now by claiming that it was the IIF that was doing the negotiations and not Greece directly. This is like hiding behind a fig leaf. But if it is true that Greece is now directly negotiating the "voluntary" restructuring and haircut and it would leave very little room for latent interpretations. Ultimately, it would be up to the English courts to decide how to construe it.
One thing is certain, the market is scrutinizing Greece’s every move and Greece would better square up to it.All one has to do, is to buy few thousands (minimum denomination is 1000) of this bond maturing on 13 September 2012 and go to an English court and declare that Greece has breached the covenants and has therefore defaulted. Apparently it is that easy. I wonder how long it would take before someone does this.
Abandon PSI+. Buyback Instead
Abandon PSI+. Buyback Instead
This post is also mentioned in Greek (citypress Yannis Paleologos)
On the 26th of October the European leaders pushed the head of the IIF to accept a 50% haircut on the nominal of the Greek bonds. This apparently was done in order to punish the banks that invested carelessly into Greek debt and to reduce the Greek debt burden. The noble aim was to reduce the Greek Debt/GDP to around 120% by 2020.
On the 26th of October the European leaders pushed the head of the IIF to accept a 50% haircut on the nominal of the Greek bonds. This apparently was done in order to punish the banks that invested carelessly into Greek debt and to reduce the Greek debt burden. The noble aim was to reduce the Greek Debt/GDP to around 120% by 2020.
They also reiterated their resolve in keeping the whole PSI exercise on a voluntary basis. In this note we argue that the size of the haircut may have struck a death blow in the PSI and that now it would be better if Greece was to make a public offer to buy these bonds back at an average of 35% (say) rather than mess with the PSI conundrums.
Problems in implementing PSI
The current PSI version (also known as PSI+) calls for the voluntary surrender of all Greek bonds maturing up to 2030 (around 205billion) and the exchange of these bonds with new ones with half the notional. The structure of the new bonds is not known and is the subject, apparently, of intense negotiations between the different parties. There are many reports on the possible structures but since nothing is finalised we would not speculate. The issues that need to be resolved are:
· Legal jurisdiction of new bonds (investors demand English law).
· The coupons of the new bonds.
· The maturity of the new bonds.
· Partial or Full Guarantees on principle like Brady bonds.
· Partial Upfront cash payment.
· Ability to amortise the losses over time.
There are however, many other issues including technical reasons with bondholders that may cause the complete failure of the PSI+ or at least very low participation. Lets look at some of them:
1. If you own the bonds outright and on a cash basis then your decision to participate would depend on where you have marked the bonds and on how much pressure the government can exert upon you to do the exchange “voluntarily”.
a. If you still own them at a 100 or at 79 (old PSI writedown) and you are a European Bank then the pressure may be exerted to participate. In this case you would suffer the further losses to 50 and perhaps more if the new Greek Bonds have lower Net Present Value. Most Greek banks and Greek Pension Funds are in this situation. In fact the directors of the Greek Pension funds may have a further hurdle to jump, that of felony charges in case they reduce the assets voluntarily!
b. If on the other hand you have them mark to market at current prices, the incentives are different. You have already taken the bulk of the losses and you have them marked at 25-40. The loss is a sunk cost. There is no upside in participating in the PSI. The reason is simple, if you chose to stay out your upside is to get repaid at 100 (especially if you own near maturities 2012-13). If you are wrong and Greece defaults then most probably you will get a recovery value of around 30-40. But this is roughly where you have the bonds anyway. So the odds are you are better off staying out of the PSI+ if you can handle the political pressure. The same logic goes for Hedge Funds and other buyers who bought the bonds after the big drop and so they have very little incentive participate.
2. Assume that you own the Greek bonds on an Asset Swap Basis. Most northern European investors and funds acquired the Greek bonds on an Asset Swap Basis[1]. Thus they have the Greek Bonds at 100. If they were forced to participate then they would suffer losses both on the Bond side (50%) and on the swap side. Since most of these Assets swaps were done when credit spread levels were around 100-200bp, unwinding the swap would cause further losses! These would be on top the losses from the new PSI+ bonds (NPV losses). Thus, it may be better for them to sit it out as the option is almost digital. i.e Participate and suffer perhaps more than 80% losses or stay out and get repaid 100%.
3. There are many investors who do not wish to touch Greek risk again either because their institutional rules do not allow to hold bonds that are not investment grade or because they are not allowed to hold bonds with maturities of more than 20years (say) or that are not straightforward boring bonds or simply because they are sick and tired of all the games being played. Participating in the PSI+ perpetuates the risk and it is not clear that the new PSI+ bonds would have high credit ratings.
4. If you are a non-EU holder of Greek risk or you are private investor (not institutional but retail or other) then there is no reason whatsoever why you should chose to participate. Probably, these holders are not more than 10% of the total.
5. The big elephant in the room is the free rider ECB. The central bank owns close to 45-50 billion of Greek bonds and has repeatedly said that it would not participate in the PSI+. If one can afford to stay out then it would join the ECB as a joined Free Rider.
6. Many bonds are structured bonds, which have liability swaps with the Greek state. Retiring these bonds would also mean closing the swap with the Greek state. This may produce gain or losses for the state. We simply do not know how much.
All of the above plus many other technical reasons point to a single answer to the Greek PSI+. Since the only bondholders that are going to participate are those that are under the political influence of the EU government then the solution is very simple:
Abandon the messy PSI+. Buy instead!
Force the holders under EU influence to “voluntarily” sell these Greek bonds at 35%. Most of the bondholders under the political guillotine have already marked them close to that value (50% or less), so they would avoid further losses and risk management of the new PSI+ bonds. Ask for the ECB to sell its holdings at purchase price (around 75%) or less. The savings in money, anxiety and endless negotiations are considerable. Lets run through the numbers.
Assume 70% participation in the buyback offer.
· After taking into account the ECB holdings the saving is going to be close to 90billion and it would reduce the Debt to GDP to around 127% instantly. This is similar saving with the torturous PSI+.
· It is a much better strategy than the prolonged negotiations perpetuating the pain for both bondholders and the Greeks alike.
· It also removes the risk of Greece defaulting or of threatening with law changes by retiring the purchased bonds.
· Furthermore, you do not have to worry about the new legal jurisdiction of the new PSI+ bonds. Some of the bonds, specifically the international ones have clauses that can cause the immediate default of Greece (see ITC note on 5th Dec on Greece Could Default)
· Buying them back and destroying them or simply changing the moratorium clause by getting the 66 2/3 majority would solve many unnecessary complications.
· It would free ECB from the burden of holding Greek risk
· It would punish the irresponsible banks by voluntarily forcing them to sell at 35%.
Of course you may ask where is Greece going to find all the money to buy back these bonds. Greece would need 73billion to retire 157billion and it would leave 48billion free riders. This is in fact the very conservative scenario (70% participation). The money can come from a new deal that is going to replace the PSI+. The time has come for bold initiatives to resolve the debt crisis and the PSI, PSI+ were bad solutions that ought to be abandoned and aborted forever.
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