German government bonds are opening moderately lower Wednesday, taking cue from weaker US Treasuries and ahead of 5-year supply from Germany and the U.K. Volumes are seen dominated by roll trading in Eurex ahead of the expiry of the Bund, Bobl and Schatz futures contracts. Focus is clearly on the Greek PSI deadline. Greece’s Kathimerini reported that Greece’s six largest banks have agreed to participate in the proposed bond swap, although noting that several pension funds will have not. Greece has said its target is 90% participation in the deal, but that it would consider going ahead if it got at least 75%. The minimum participation rate needed to allow activation of the so-called collective action clauses (CACs), which would require all bondholders to participate, is 66%. Greece currently has E206bln bonds outstanding, of which E177bln are governed by domestic law and E29bln under foreign law. According to the Greek Finance Ministry, “the expiration deadline for the invitations is Mar 8 at 2000GMT, subject to the Republic’s right to extend, reopen, amend or terminate the invitations as provided therein”.
EasyForexNews Research Team