Private Greek debt holders likely to approve plan
Euro-zone governments approved the first half of the second Greek rescue package at their summit last week, with consent to the remainder conditional on the outcome of private
bondholder participation in restructuring privately held Greek debt (PSI), and the Greek government’s ability to convince the market of its determination to implement further
measures to improve its budgetary situation. This Wednesday represents the final day on which private bondholders may respond to requests concerning participation. Greece will only approve the debt restructuring agreement if creditors representing at least 75% of total private debt participate. That agreement includes a EUR 106bn bond swap giving private bondholders less than 50% of the original principal. If the offer fails to generate adequate support among them Euro-zone countries are, at least for now, also likely to refuse additional measures to help Greece, significantly increasing the risk of a hard default. Such an outcome would probably once again raise doubts whether Euro-zone countries are really able to manage the region’s debt crisis and renewed concerns regarding the risk of contagion from small- to larger regional economies. Consequently, the break-up risk premium attached to the euro would increase substantially and the currency fall. Our main scenario is still that the PSI will be endorsed by a sufficiently large number of private debt holders, enabling the remaining Euro-zone countries to approve the second Greek rescue package.
CLOSE SHORT NZD/NOK FOR A POTENTIAL 3.3% PROFIT. ADD TO SHORT NOK/SEK On February 14 we recommended selling NZD/NOK at 4.77 for a target at 4.60. The cross has traded at a low just above target. We therefore close the trade with a potential 3.3% profit. In addition, we add to our short NOK/SEK position entered on February 23 at 1.18.
We raise the stop loss for the position to a daily close above 1.2050. We adjust the target to 1.15.
Click here to read the full report: FX Ringside
SEB tech team