A Greek Victory (Right?)

So it´s still early to tell but reports indicate that Greece has successfully completed its 10 billion euros debt buyback. Local banks and international hedge funds appear to have taken up the offer with sufficient gusto. We won´t know the final figure until we get official confirmation, but the hope is again for a withdrawal of about 30 billion euros of old (well, new; these are the bonds issued as part of last March´s restructuring) debt. After this new round of debt shake-up, Greece will have almost no private sector creditors, being in the hook mostly with public sector bodies. This could be good news or bad news for the Hellenic Republic. Good because public creditors can show unlimited flexibility when it comes to friendly terms (once the buyback is confirmed, the bailout loans will automatically become much more accomodating and affordable for Greece; courtesy of its EZ pals). Less good because now private creditors feel crowded out and very junior, not the most enticing of encouragements for someone to buy your bonds (and keep in mind that Greece has not yet actually defaulted, at least according to the formal definitions).
What´s next? Greece post-buyout and its perks should be in a relieved position debt-servicing-wise. Public lenders could be rationally assumed to be willing to essentially transform their claims into perpetuities (the ultimate “can-kicking”). EZ taxpayers could be safely assumed not to be too aware of the technicalities of what´s going on and why Greece may never have to really repay them the more than 200 billion euros they are owed. I don´t think we´ll see German pensioners chasing Greek assets with the zeal and intensity of vulture hedge funds. Can we de facto proclaim that post-buyback Greece is a Greece with very little effective debt obligations? It may be a tad adventurous to say so, but perhaps it mayn´t.

Amid all this debt shenannigans, amid all the news inundated with haircuts, collective action clauses, net present value losses, and Dutch auctions, I for one would love to open the papers one day to the rather more inspiring and uplifting headline “Greek start-up company invents new revolutionary product, to be desired and purchased globally”

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