"TAP não sobrevive se se mantiver pública", garante Pinto Luz

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Pimco's Gomez: Too early to buy Greek bonds
link: http://www.bloomberg.com/apps/news?pid= ... eAXmeam4HM

April 13 (Bloomberg) -- Greece’s fiscal position remains tenuous and it’s “too early” to buy the country’s bonds even after it won a pledge of aid from the European Union, according to Pacific Investment Management Co., manager of the world’s largest bond fund.

“It’s probably a little bit too early for us to be buying Greek debt yet,” Michael Gomez, Pimco’s co-head of emerging markets, said in an interview today with Bloomberg Radio. “They have received a little bit of breathing room from the announcement we saw over the weekend. But this doesn’t change the fundamental adjustment Greek is facing and that continues to be a very large and daunting one.”

Euro-region finance ministers and the International Monetary Fund offered Greece as much as 45 billion euros ($61.1 billion) in loans amid concern Greek may struggle to finance its deficit. The extra yield investors demand to hold the country’s 10-year bonds instead of German bunds, the region’s benchmark, climbed to 442 basis points on April 8, the highest since 1998.

“In terms of trying to pick a bottom or coming into the markets now, I think our stances are more on the cautious side,” said Gomez. “Yes, there has been some breathing room given to them, but certainly the markets are signaling that issues they face have not gone away.”

Budget Shortfall

Greece needs to raise 11.6 billion euros by the end of May to cover maturing debt, with another 20 billion euros required by year-end to pay interest and finance this year’s deficit. The government estimated last week that its 2009 budget shortfall to be 12.9 percent of gross domestic product, the biggest in the euro’s history and more than four times the EU’s 3 percent limit.

Greek two-year notes rose for a third day earlier today as confidence grows that the government will avoid a default after the European Union support. The government sold 780 million euros ($1.06 billion) of 26-week bills at a yield of 4.55 percent, attracting bids for 7.67 times the securities offered, the nation’s Public Debt Management Agency said today in Athens.

“It was a more successful auction than perhaps some had assumed coming into it,” said Gomez. “But the size is still relatively small. There’s still a tremendous amount of work to be done in terms of the structural reform agenda Greek faces.”

Heavy Lifting

European countries including Portugal, Spain and Ireland also face similar financing needs as Greece and investors should demand higher yields to compensate the risks of holding their bonds, said Gomez.

“These are multiyear adjustments that are difficult to pull off,” said Gomez. “The governments have to do a lot of heavy-lifting in order to alleviate the stress of their economies. This is a problem that is not going to go away.”

Compared with Europe, fixed-income assets in developing countries, including Brazil, offer more “appealing” value, said Gomez.

“There are very, very strong cases to think about some of these emerging countries as a replacement for developed world fixed-income allocations,” Gomez added.

Gomez said he expected Asian currencies to continue appreciating on “cheap valuations” and “robust” economic growth in the region.

The Malaysian ringgit has gained 6.3 percent versus the dollar this year as the third best performing currency in the world. The Indian rupee rose 4.6 percent, while the Indonesian rupiah advanced 4.2 percent.

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Emerging market investors to shun Greek bonds: Van Eck

http://www.moneycontrol.com/news/world- ... 50890.html

Greece's plans to sell itself in the United States as an emerging market country for the first time will likely backfire even if it launches bonds with near double-digit yields, a hedge fund manager with Van Eck Global said on Thursday.

Emerging market investors are intrinsically hungry for risk and juicy yields, but they also have their eyes trained to identify where the next crisis is coming from, argued Eric Fine, who runs a hedge fund focused on emerging markets debt and currencies at US money manager Van Eck.

"Emerging market investors have the stomach but they also have the brain to understand the Greece situation differently than the previous set of (institutional) investors," Fine, who helps manage Van Eck's USD 21 billion in total assets, told Reuters.


"It just doesn't look as a sustainable situation for us," he added.

Greece plans to sell a global bond in dollars in the next two months, targeting emerging market investors as Asian and European buyers continue to show less enthusiasm for Athens' debt.

The US bond sale is part of a plan to raise an additional 11.6 billion euros (USD 15.5 billion) to cover a gaping budget deficit and refinance old debt as it comes due in May.

Athens insists on finding a market solution for its financial problems, instead of using a promised lifeline offered by the European Union (EU) and the International Monetary Fund (IMF).

But markets already have grown increasingly uncomfortable with Greece's plan.

"The idea of Greece raising money in the private market is in the process of being rejected by the market," Fine said.

Yields paid on Greece's 10-year global bonds soared to near 7.5% on Thursday, according to Tradeweb, while the cost of insuring five-year Greek bonds against default reached a new high of 450 basis points, according to Markit Intraday.

That makes Greece the fifth most expensive country to insure against the risk of default, after Venezuela, Argentina, Pakistan and Ukraine, according to Markit.

In Athens, Greece's Economy Minister Louka Katseli said on Thursday "there is no chance Greece will default," but at this point rhetoric will not help the country anymore.

Investors would only feel comfortable to lend to Greece, said Fine, when they see a more explicit support from the European Union and the IMF. But that will not happen before Athens agrees to formally request financial aid, he added.

"The Greek government has to be forced to bring in the EU and the IMF and then the market probably rallies, but it might be short-lived," said Fine, mentioning lack of clarity and legal concerns on the EU/IMF aid package.

A market rally should also be temporary because, as soon as Greece receives financial aid from multilateral sources, markets will start thinking about the next candidates for state funds—"Spain, Portugal, which everyone has been talking about, but I'd throw Italy and Belgium in there," said Fine.

With the clock ticking for the Greek government, a final solution might be necessary rather soon. But Fine believes Greek politicians will only act at the last minute.

"There are a number of buttons that say 'kick can down the road,' and I think they are going to try to push as many of those as they can. But the can is getting very, very heavy and there is a lot of wind blowing in the other direction."

[Onorio]

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[LTCM]

Crisis In Greece
Leaking Greek Banks
Parmy Olson, 04.08.10, 10:50 AM ET

LONDON -

As if things couldn't get any worse for Greece, its banks are now dealing with a drop in local deposits as Greek citizens get anxious about the true safety of their money.

It is not quite as bad as a bank run, but consumers pulled around 10 billion euros' ($13.4 billion) worth of deposits from Greek banks in the first two months of this year, according to Greece's central bank, squeezing the country's biggest lenders, who are already struggling with a rise in non-performing loans. This latest outflow represents a 4.5% drop in the country's total deposits.

Though the true reasons for the mass withdrawals are unclear, it is possible they are an attempt to avoid hefty tax increases as Athens tries to aggressively cut back its budget deficit, along with plain uncertainty about the future of the Greek economy and banking system.

The country's finance minister, George Papaconstantinou, said Thursday that Greece's four biggest financial institutions--Alpha Bank, Piraeus Bank, EFG Eurobank and National Bank of Greece--had requested loan guarantees and bonds from the government totaling 17 billion euros ($22.7 billion).

That money represents the last of a 28-billion-euro ($37.3 billion) rescue package that Greece announced in late 2008. Markets will find out if and how those funds will be doled out next week, after it is discussed by the Bank of Greece. "This is just one more sign that the pressure on the Greek economy has not eased following the euro zone safety net, announced during the last week of March," said IHS Global Insight economist Diego Iscaro.

Indeed, the spread on Greek 10-year bonds over their benchmark German counterparts widened to a record 445 basis points on Thursday, taking the euro zone's most expensive sovereign borrowing rate even higher.

One reason for the renewed concerns in the bond market was another set of comments from Papaconstantinou that the country's 2009 deficit could be deeper than the government's previous forecast of 12.7%, at up to 12.9%. One of the reasons Greece has struggled to sell its debt has been its own previous misrepresentation of economic indicators, so markets are all the more wary of any statistical anomalies.

There have also been more reports of resistance by Germany against the euro zone's recently announced emergency support plan for Greece. A report in the daily Frankfurter Rundschau on Thursday cited an internal paper from Germany's Bundesbank arguing that the region's safety net for Greece undermined the euro zone's fiscal rules.

These factors have merely fanned the flames of concern about Greece and its ability to pay back billions of dollars of loans made in the form of bonds over the next couple of months. The country has to refinance about $27 billion of bonds maturing in April and May.

European Central Bank President Jean-Claude Trichet sought to downplay concerns that Greece could ever default on its debt at a press conference following the ECB's rate decision on Thursday. He insisted that a support framework outlined by European Union leaders last month was "workable." (See "Fiddling While Athens Burns.")

The support plan was a "very, very serious commitment" by euro zone governments, he said.

Yet the region's plan had been aimed at providing markets with reassurance that Greece would get its debts back on track, and continued wariness from Germany, concerns about the true nature of Greece's deficit and a potentially painful liquidity squeeze of local banks means that the calm that came over investors earlier this month after the package was announced has now all but vanished.

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Greece's deepening debt crisis

http://www.economist.com/business-finan ... d=15868427

Worries about Greece’s ability to roll over its maturing debt are giving way to bigger fears

GEORGE PAPANDREOU may have spoken too soon. On April 6th, just three days after the Greek prime minister claimed “the worst is over,” the yield on Greek ten-year government bonds leapt from 6.5% to above 7%. Yields remain at alarming levels. On April 7th the spread over their German equivalents stood at more than four percentage points, the highest since Greece joined the euro in 2001. The D-word (default) is increasingly on the lips of analysts. The cost of insuring Greece’s bonds surpassed that of Iceland’s this week; Greek banks have asked to tap a government liquidity scheme. Far from coming to an end, the Greek debt crisis seems scarcely to have begun.

On the face of it, this week’s renewed bond-market jitters were caused by growing doubts that an emergency-aid package patched together by European Union leaders last month offers Greece much help. Under the terms of the EU deal, any short-term support would have to be approved by all of the 16 countries in the euro zone. German anger at Greece’s profligacy could easily delay the cash it would need should bond markets close.

Any rescue package would be co-financed by the IMF, which may be good for €12 billion ($16 billion) of swift support. But the stipulation, insisted on by Germany, that EU cash would only be furnished at near-market rates meant the deal failed to provide an interest-rate ceiling for Greece’s public debt, leaving the country to suffer every turn in market sentiment. Senior EU sources say a formula is being discussed to address this flaw. The interest- rate benchmark would be set over a long period, so it would not be unduly influenced by immediate market stresses. Rates paid by countries with a credit rating similar to Greece’s would also be a factor.

Optimists are still confident that the government can raise enough funds in the next six weeks to stave off default, though at a high cost. The government has more than €13 billion in cash, enough to refinance maturing debt and fund the budget deficit during April. It needs to raise another €10 billion-12 billion in May. The likely borrowing requirement for the remainder of the year, around €25 billion, is spread more evenly. “If we can get over the May borrowing hump, it’s a relatively smooth cruise for the rest of the year,” says one trader in Athens.

That is a big “if”, say pessimists. In the six months since the Socialists were elected, spreads have jumped by more than two percentage points. Greece can no longer risk holding an auction for a new issue of bonds for fear that it fails. Its Public Debt Management Agency has resorted to syndicated-bond sales managed by big international banks. But the pools of spare cash that Greece can tap seem to be drying up.

Subscriptions for a new seven-year bond on March 29th reached only €6.2 billion, just above the target of €5 billion. Two previous issues this year were heavily oversubscribed, even if the investors who were allocated bonds are now cursing their luck. On March 30th Greece failed for the first time to raise a targeted amount when it offered a fresh slug of an existing, but illiquid, 20-year bond. In an auction restricted to local market-makers just €390m was subscribed against a target of €1 billion. The bond was reopened in part to accommodate hedge funds that wanted to cover short positions. Some may subsequently have bought the bonds they needed more
cheaply elsewhere. But for many observers this was a clear signal that Greece will need a bail-out soon.





George Papaconstantinou, the finance minister, plans to lead a roadshow to America in the last ten days of April. He hopes to persuade American investors, including emerging-market funds, to buy $5 billion-10 billion worth of a new dollar-denominated bond. It would be a heavy irony if Greece, a member of the euro club, were temporarily reprieved by loans in dollars. But the fear is that investors will stick to buying the bonds of genuine emerging markets, which have much more solid growth prospects.

It is not yet clear what Greece’s fallback plan will be if American demand is weak. “The roadshow will be decisive. If it doesn’t fly, the alternative is either a wave of T-bill issues at very high interest rates, or a rescue package,” says a senior Greek banker. Mr Papaconstantinou insists that Greece does not plan to fall back on support from the EU and IMF. But he also accepts that the government cannot go on borrowing at such high interest rates.

Even at lower interest rates, however, Greece will struggle to keep borrowing. Previous analysis of the country’s debt dynamics by The Economist, based on fairly benign assumptions, concluded that Greece’s public debt would stabilise above 150% of its GDP. That burden is probably too much to bear for a small country with such ropy economic prospects: it also implies that a much bigger bail-out pot is needed than the one currently being mooted. Some buyers of Greek debt may still think the interest rewards on offer are worth the default risk, but they seem to be a diminishing band. The bigger worry for Greece is not its immediate funding hump, but that investors are starting to lose faith that the country will be able to sustain its growing indebtedness.

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Investors rush to sell Greek bonds
Apr 8th 2010 | ATHENS AND LONDON | From The Economist print edition
http://www.guardian.co.uk/world/2010/ap ... reek-bonds


Elena Moya
guardian.co.uk, Thursday 8 April 2010 14.38 BST

Market turmoil hits the euro and adds to fears of economic collapse in Greece
The Greek debt crisis deepened today as investors sold off the country's bonds, lifting borrowing costs and adding fuel to speculation that Greece will not be able to pay down its debts.

The turmoil sent the euro and European equity markets lower, as a collapse of the Greek economy could have a contagious effect on other southern European countries, such as Portugal. The euro weakened to $1.329, after hitting a low of around $1.328, while the Dow Jones European 600 index traded 1.2% lower at 265.40 points. The FTSE 100 fell 69.15 points to 5692, while Germany's Dax 30 index and the CAC 40 of France were also down by more than 1%.

"Greece continues to look like a slow-motion train crash," Steve Barrow, analyst at Standard Bank, said. "The crash has not occurred yet but it is coming."

Greek bonds fell, pushing the premium that investors demand to buy the securities to 440 basis points over German bunds, the highest since the European currency was created a decade ago. The cost of insuring $10m (£6.6m) of Greek debt leapt to $450,000, from $410,000 yesterday, according to Markit data. That is more than four times the price paid for Britain's debt protection.

Last month's announcement by the European Union that it would stand by Greece has failed to calm markets.

"Efforts to avoid a crash seem doomed to failure, whether it is emergency loans or some other initiative," Barrow said. "As the crisis plays out, so bond spreads are likely to widen much further and the euro fall much more."

Investors want more details about a potential rescue plan, but EU leaders, led by the German chancellor, Angela Merkel, have declined to provide specific guarantees.

"The market is in the mood to force the hand of the authorities over this," Deutsche Bank said in a note to investors.

Pimco, the world's largest fixed-income fund management, and other investors are boycotting Greek debt until they see further cuts in the country's ballooning budget deficit.

Jane Foley, director of research at Forex.com, said: "With or without support from the EU, the bottom line remains that after years of fiscal mis-management the market has little confidence that Greece can swallow the necessary austerity measures and slash its budget deficit.

"The debt financing crisis for the Greek government is closer to boiling over."