The Banking and Strategy Initiative

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European Sovereign Debt Crisis: Greek Swap Deal consumed, profits done

The European Central Banks as the ECB collectively had purchased $50 bln of these Greeks ( GGBs ) fromt he flailing government and now the bonds will be exchanged to the Central Banks for Eur 50 bln in nominal value of new bonds, generating a 19% – 41% profit depending on what price your Central Bank bought the tranche, the profits will be distributed  among the Central banks based on their holdings. The Central banks having exchanged the new nominal EUR 50 bln, they would not participate in the voluntary haircut when the swap takes place with Private creditors well in time and without the need for ECB to take the haircut as discussed to death in the last mile discussions.

However the Wednesday meeting of Foreign ministers was canceled, because the Greek government will apparently not deliver any more schedule of cuts for the last EUR 375 mln till the April Elections in the state and so the rejoicing in the markets may be shortlived, though BofA at a long awaited $8 mark and Citi at $32 is a site for sore eyes before th eMoody’s reports the results for the 17 major banks and 97 regional European counterparts next.

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This entry was posted on February 16, 2012 by in Financial Markets and tagged , , , , , , , .


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