Greece default.

Generali

michaels wrote: »

But surely with a projected debt level of 120% of GDP their remains a non-negligable chance of further default and therefore a risk rated interest rate will be payable which will require a primary surplus not consistent with growth which will imply that the reduced debt levels remain unsustainable or am I missing something?

Greece isn't borrowing in the market. They're borrowing from The Troika.

ILW

Generali wrote: »

Greece isn't borrowing in the market. They're borrowing from The Troika.

Where are the Troika borrowing from?

Mr_Mumble

michaels wrote: »

But surely with a projected debt level of 120% of GDP their remains a non-negligable chance of further default and therefore a risk rated interest rate will be payable which will require a primary surplus not consistent with growth which will imply that the reduced debt levels remain unsustainable or am I missing something?

Not missing anything really, though, Greece should be paying a lower interest rate on their debt which should lessen the burden at a particular debt-to-GDP ratio. I don't see why a primary surplus is mutually exclusive from growth in the long-term and if Greece can internally devaluate in the next few years it could be on a sustainable path with a primary surplus by 2020.

ILW

Who are they then?

Mr_Mumble

Sorry, ILW, deleted my post because it was supposed to be an edit rather than a new post. The EFSF has been issuing bonds since January, e.g.:
online.wsj.com/article/SB10001424052748704698004576103472359589138.html

If I had a Bloomberg terminal at hand I'd be able to tell you who has been buying these bonds, I don't so I can't. It will probably just be the usual big pension fund and investment company names though and many private pensioners will indirectly have invested in them.

CLAPTON

troika

the EU, ECB aand IMF

IronWolf

howee wrote: »

the 50% hair cut is the joke Greek bonds were only valued at 40% there value before today the banks have already wrote it off, the default is not a default if its a voluntary agreement so no triggering of insurance claims worth billions or pass the parcel (debt bomb)

I think thats the point behind it. A voluntary waiver of the nominal amount is not a default and wont cause a chain reaction in credit default swaps and insurance claims which could again bring the financial system to its knees as credit and capital dries up.

tomterm8

ILW wrote: »

Where are the Troika borrowing from?

The European central bank, and the IMF, both of which literally have an unlimited supply of money.

Generali

IronWolf wrote: »

I think thats the point behind it. A voluntary waiver of the nominal amount is not a default and wont cause a chain reaction in credit default swaps and insurance claims which could again bring the financial system to its knees as credit and capital dries up.

The ISDA* committee will decide whether or not this is a default event. My guess is that they'll decide it isn't but it's far from a forgone conclusion.

Bloomberg reckons it's not going to trigger CDS. I believe that the FT have their doubts.



*ISDA = International Swaps and Derivatives Association.

tomterm8

Generali wrote: »

The ISDA* committee will decide whether or not this is a default event. My guess is that they'll decide it isn't but it's far from a forgone conclusion.

Bloomberg reckons it's not going to trigger CDS. I believe that the FT have their doubts.



*ISDA = International Swaps and Derivatives Association.

Only up to a point. Almost all of these contracts are written in either Greek or UK law. If the UK becomes party to a new european treaty, then UK law is almost bound to change.