A Greek haircut could go all the way

Greece seems to be very close to a deal on a voluntary debt rescheduling, which could be announced later this week. Considering that it will be necessary with a participation rate in the rescheduling above 90% for debt to return to ”sustainable levels”, we find it highly likely that collective action clauses (CAC’s) will be introduced retroactively.

Looking further ahead the challenges still loom large for Greece. A key weakness is the slow progress on structural reforms. This is preventing a speedier return to growth, which is essential if the stabilisation of debt is ever to succeed.

Read more in the Euro area update attached.

Best Regard
Anders Matzen, Chief Analyst

Other news

Week ahead: Central bank intervention looming?

18 May 2012 | Jan von Gerich

All eyes remain on anecdotal news on how depositors in Greece and outside the country are reacting to the recent events. In terms of economic data releases, the main focus will be on flash PMIs for May.

China: PBoC cuts reserve requirement rates

18 May 2012 | Annika Lindblad

The central bank (PBoC) cut reserve requirements by 50 bp last weekend, thus continuing to ease monetary policy. However, the pace remains slow, and we do not think the PBoC is done yet.

Government Bond Market Update

18 May 2012 | Gaute Langeland

The upcoming auction has potential to disappoint. Positioning in the market is less supportive than it has been for a long time as dealers are no longer short and unlikely to continue buying much more supply at current levels.