- Wealth PMS (50L+)
The EU leaders have decided (pact) to rescue Greece:
This is likely to be called a default. First, at 3.5% versus the 30 odd percent currently being the market rate for 2 year bonds, or even 20% for 10 years, the banks are likely not doing this on their own. Secondly, the stretching of maturities, in any banking system, is considered a problem.
Bloomberg says the EFSF will buy debt across the stressed euro nations. They expect a 90% participation rate from current bondholders.
Guardian: Trichet, President of the ECB has said that Greek banks will be recapitalized to the tune of 20 bn Euro .
The markets should rejoice first because a decision has been reached. They will react individually to how bad or good others think the decision is. This is a business where impressions impact business, being a highly leveraged one. So wait and watch. There are lots of useful and interesting trades that will come.
Note that effectively there is more money out there. Some of it will come our way.