Greece is (still) the word.

Are you ready for the sequel?

Yes, even if it feels somewhat surreal, the EU does indeed appear to be verging on throwing more bad money in the direction of Greece, after having last year thrown reasonably good money in that direction, which subsequently went bad.

Using latest press reports in conjunction with earlier models, thinking in The Square Mile is basically shaping up as follows:

  • Official part of bailout will account for around half the funding gap or EUR32B
  • Other half to be funded through expected privatisation receipts and roll-over of debt mostly expedited by Greek bank bill issuance
  • People seem keen to emphasize: voluntary rolling over doesn’t change terms
  • On that basis, there would be no private sector participation haircuts or changes in any terms of the bonds – however this does not preclude some form of NPV ‘bleed’ for non-government holders, even if not contractual
  • Execution risks are plain and ongoing: capacity to raise revenues from privatisation is questionable at best; fiscal/global economics not 100% visible naturally; likelihood of further social and political unrest are clear and present dangers
  • Good luck with that EU
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