Alpha 0.50 EUR and Piraeus 0.55 EUR. Already there are funds which are waiting to buy banks to reduce the large accounting losses [averaging down], which can generate a strong upward momentum.
If either the solution envisaged by SYRIZA government for creation of a bad bank or the FSF plan for NPLs to recapitalize the industry without new share increases is followed, there could be 380-400% gains in banking stocks. Source: Bankingnews.gr
Greece has requested an Extraordinary Eurogroup as early as Monday with a view to reaching an agreement ASAP. Varoufakis says the forthcoming agreement would "normalize the situation and we can talk about recovery after June." Also noted after closing the deal with institutions, the country will enter the markets and may issue bonds, with a sustainable debt, and begin the growth of the economy.
Foreign investors believe that if the deal closes stocks will move fast, surprising many.
The yield on Greek bonds have fallen by 13.6%, and bond purchases of 2 billion euros are anticipated to be placed by Morgan Stanley and JP Morgan.
Despite the huge losses incurred in bank stocks by foreign investors last year, large American fund managers recently met with Greek bankers and companies in Athens. Blue Bay, Canyon and Farallon expressed interest in both bonds and shares. However, given the damage to banks since last June, these new class of foreign investors has changed their approach. Because of political risks and the possibility of elections they will invest 30% of their funds now and 70% in June in view of the government's agreement with the lenders..
Also, along with Fairfax, Fidelity, Blackrock and SCHROEDER are investing as the cycle starts up. I believe the translation indicates J. Paulson, Third Point, D. Einhorn and Baupost are no longer invested in Greece. Currently there are 1-2 billion dollars less invested than in 2012. .Source: newmoney.gr
Spring, I don't know how my reply and your response got deleted. Here it is again:
It’s hard to say when Greece will really run out of money. There have been different reports. Varoufakis writings before he became MOF said “we use our readiness to default as a bargaining strategy by which to bring about a New Deal for Europe.” Ha, wouldn’t that be coincidental if Greece says they are out of money the same week Alexis is in Russia. I’m hoping Merkel softens her tone. Tsipras is presenting a more detailed 50-page list of reforms.
And your reply said there was a geopolitical risk if Greece saddles up to Russia with a port lease deal in hand.
The current disagreements with our partners are not unbridgeable. We and our partners already agree on much. Our government is eager to rationalize the pension system (for example, by limiting early retirement), proceed with partial privatization of public assets, address the non-performing loans that are clogging the economy’s credit circuits, create a fully independent tax commission, and boost entrepreneurship. Public administration is in urgent need of modernization, and public resources must be used more efficiently. Overwhelming obstacles block the formation of new companies. And inequality has reached outrageous levels, preventing society from uniting behind essential reforms.
The differences that remain concern how we understand the relationships between the various reforms and the macro environment. None of this means that common ground cannot be achieved immediately. The Greek government wants a fiscal-consolidation path that makes sense, and we want reforms that all sides believe are important.
Our task is to convince our partners that our undertakings are strategic, rather than tactical, and that our logic is sound.
Their task is to let go of an approach that has failed. (full article at Project Syndicate, April 23)
What is the hold up? Euro-zone governments are acting as though they have the upper hand in negotiations because they control the disbursement of cash that they believe Greece desperately wants and needs. Greece, however, does not want new loans: It wants to restructure its debt, probably throwing all obligations out over a very long-term repayment schedule with a huge grace period up front and big bullet at the end.
What the euro-zone governments cannot seem to accept is that Greece does not need permission to default on its bonds and force a restructure: It can do that on its own, without a new “program” from its creditors and without accepting any terms or conditions.
Finance Minister Varoufakis has admitted Athens’ debt is unserviceable in its current form. In the very earliest days of this government, he identified the error in past approaches to Greece’s persistent cash flow problems: resolving liquidity gaps at any cost when solvency was the real issue. Over the past five years, Greece has received 145 billion euro in new loans from EFSF, 100 billion euro of credit from ECB and more cash from the IMF. Greece has been “fixed” by increasing its debt burden as a share of its income by half. It is obvious that what has been done has not worked. Greece’s economy has not been repaired—it has been slaughtered.
Greece’s position in its conversations with its creditors is quite strong. It is now [was] running a primary fiscal surplus equal to 3-1/2% of GDP. If debt service costs were eliminated from the public finances—as they would be in a true default—a cash surplus would accrue. So if Greece’s government defaults on its debt service obligations, it can cover its own domestic operating expenses without any cash inflows beyond tax revenues—creditors can go fish. (continued below)
1. Contagion: 80 percent of Greek government bonds are in the hands of other eurozone members, and a default would drag them down.
2. Money on tap: The ECB can allow Greece to boost liquidity to banks and help Athens refinance in the short term. Reason enough to believe that a Greek default wouldn't reach Argentinean proportions,
3. Geopolitics: Europe needs Greece as an outpost in the eastern Mediterranean. The ECB would rather lose a leg than lose Greece
4. Nuttiness is a good sign: “The Greek government’s behavior may appear erratic, but it’s probably a good indicator that the country’s outlook may not be half as bad as many media reports would have us believe,” says. Deutsche Bank Analyst Nicolaus Heinen
According to analysts, it is important that anyone trading the market understand the difference between fear and pessimism, greed and optimism. When prices rise too quickly and run away from the trend line, we have greed which usually corrects itself back to the trend line. When prices fall too quickly, fear is causing people to accept prices that are too low and prices fall far below the downward trend line.
When you open a chart for NBG and draw the latest trend line, the low point was a close of 1.07 on April 21. It’s easy to see the direction of that trend. Looking at a trend line from the 52 week closing low of 1.03 on Jan 28, it still shows a slight upward trend. That longer trend line was broken on April 14 and came back above it on April 27.
The longer trend indicates that the pessimistic mood of the market has only slightly been broken since January. Many foreign investors have not re-entered the Greek market since losing money. However the more recent trend since April 21 is positive. IMO much depends on the future events that unfold in Greece for the positive mood to continue. I'm surprised that the price hasn't been more volatile due to the uncertainty about the agreement with creditors.
NBG is trading above its 20 and 50 day moving average, 1.38 and 1.30 respectively and yesterday went below its 10 DMA of 1.41. Over the past month, shares of NBG are up 17.6%. Over the past 3 months they are down 14%. The relative strength index is 53.
The government found the necessary funds. The Greek state will repay 448 million of a loan installment to the IMF on April 9 and will repay the treasury bill 1.4 billion on April 14. Treasuries of 650 million owned by foreigners are not being renewed and will be covered by cash from various agencies of government. These state agencies are being transferred to the Ministry of Finance for management.
The State through the EFSF controls 57.2% of National, 67.3% of Piraeus Bank, 66.24% of Alpha Bank, and 35.4% of Eurobank. Goo DOOT gl/7Wq5d7 buenas noches
“Yes, [exit from the Euro can be avoided]. The irony of Syriza’s victory is that it came just at the point when a workable compromise should be possible.
“By late 2014 Greece had managed to eke out a small “primary” budget surplus, with tax receipts exceeding spending, excluding interest payments. That’s all that creditors can reasonably demand, since you can’t keep squeezing blood from a stone. Meanwhile, all those wage cuts have made Greece competitive on world markets — or would make it competitive if some stability can be restored.
“The shape of a deal is therefore clear: basically, a standstill on further austerity, with Greece agreeing to make significant but not ever-growing payments to its creditors. Such a deal would set the stage for economic recovery, perhaps slow at the start, but finally offering some hope.” (search “Greece on the Brink” for full article)
Forgot to post: Alpha Bank's short-term target in USD is 0.13.
Default is an easy course for Greece to accept: It already has no access to capital markets, and its banks are already largely excluded from international commerce.
However, a default would be much tougher on creditors. Once informed of a default or an intention to default on a single bond, T-bill or loan, all paper of the single sovereign issuer would be declared in default by cross-default clauses. Generally accepted accounting practices dictate that creditors would have as little as 90 days and no more than 120 days to either define a clear path toward resolving the default or to take the hit of writing down the assets to zero. No one in the euro-zone governments wants to see an already undercapitalized financial system suffer a hit of almost #$%$300 billion on a single day this spring: The knock-on effects are hard to predict and could be wider than appreciated in advance, as Lehman’s and LTCM’s bankruptcies have demonstrated.
What the governments are negotiating right now is a bridge financing arrangement that will buy a few extra months for a creditor committee to come up with a good resolution. That creditor committee would likely consist of the EFSF and ECB, the two biggest stakeholders in the debt resolution. Private sector bond holders, if they can organize themselves, may lawyer-up and win a seat at the table, too. The euro-zone governments themselves will have no standing in this conversation, as they are not creditors! Remember, the Maastricht Treaty forbids governments in the euro zone from lending money to each other. This means that the likes of Germany’s Chancellor Merkel and Finance Minister Schaeuble will be excluded from the conversations.
What will Greece ask for? Whatever terms Greece manages to obtain on its restructuring, they will never be more generous that the first deal asked for. In the end, it is unlikely that terms of more than 40 years to maturity will fly, and more than a 15 years of grace will be difficult. By Carl Weinberg
Tsipras, Merkel and Hollande converged on the need for a compromise solution in the presence of the International Monetary Fund so to agree within 10 days. The IMF may insist on debt restructuring.
IMF Director Poul Thomson dismissed press reports that he had asked Europeans for a debt haircut. “I pushed them for debt restructuring,” he said and emphasized that no study has been done for debt sustainability.
Threats by the IMF increase pressure on the Eurozone, so that it will be more flexible. As pointed out by analysts at RBS, the decisive intervention of the IMF in the Greek issue is a positive development.
Yahoo is ridiculous, it will not let me post more than a few lines at once. The new government has announced parliamentary inquiries into who saddled Greece with the bailout plan and whether all of its massive national debt was incurred legally by previous Greek governments.
The Independent Greeks have called for Mr. Georgiou’s resignation, blaming his statistical revisions for abetting the country’s German-led creditors.
Georgious said, “It is high time that the case goes to court. This way the whole of Europe will find out about Eurostat’s maneuvers to get rid of Greece.” Georganta said Greece’s true deficit in 2009 was a mere 4% of GDP. WSJ
The country’s chief statistician, Andreas Georgiou, was summoned to testify to prosecutors late last week and faces further questioning today. The EU’s statistics arm, Eurostat, has approved the deficit numbers from the Hellenic Statistical Authority, known as Elstat, which has been under Mr. Georgiou’s leadership since late 2010. The revival of the case comes as Greece’s new government seeks to challenge the tough austerity and free-market overhauls imposed by Greece’s main lenders.
But Mr. Georgiou’s strict application of Eurostat’s standards to Greece’s public finances has angered some Greek politicians and Elstat colleagues, who argue that an exaggerated deficit served the interests of Greece’s foreign creditors. (cont. below due to Yahoo)
The dictionary defines racisim…. the right to dominate others; hatred or intolerance of another race. I don’t believe in dominating anyone regardless of race, and I don’t hate other races that are non-Caucasian. I also accept persons holding different beliefs. However, if a person is truly honest with himself, I believe he will admit to a degree of bias as it’s usually difficult to accept an opinion or custom that is different from our own. Since fences were not erected, we have to make the best of it, work together for the common good and keep peace. And I’m certainly not a fan of Al Shar*** as he seems to relish stirring up controversy. I would not have ordered the Bangladeshi out of his seat. If that’s sappy, then I’m sappy. (ha, just noticed Yahoo censored my earlier reply b/c I had "." COMM after dictionary)
increasing expectations that the two sides will show the following greater understanding of the issues that divide them.
The Irish Times writes, “It appears the end of the dangerous journey to Greece. The tones, and after the meeting Tsipra - Merkel in Berlin, is more conciliatory.”
fp, what good will it do determine who Red is? That's an honest qustion - I really don't understand. I'm just more interested in sharing stock information.
LOL, Red I don't want to make any erotic comments (and I've thought of a few). I'll let you handle that department - aren't you and B getting tiring of the confrontations?. I miss your serious discussions about Greece.