London (Reuters)-investors long-term standing aloof from the Greek debt crisis to holders of its bonds of the Government to take a leak large enough to cut the country's debt to sustainable levels before they consider returning.
Greece is still expected to default to a certain point and most investors who dumped bonds over the past two years and which are crucial to put the ailing economy back on its feet, the longer it is delayed, the longer it will be before they consider watching again the Greek heritage.
A likely second rescue-currently under negotiation tortuous-is seen only as a means to buy for the banks of the eurozone for any loss of time and protect the largest economies of the block from contamination, while the reforms attached to the package will be difficult to implement in the face of deepening public resentment.
"We would buy if the economy fails to reform itself and the banking sector is self-funded, but I don't think that's going to happen in a view of five years," said Russell Silberston, head of global interest rates at Investec Asset Management, which manages $ 31 billion of fixed-income assets worldwide.
"Our view is that they also need before that by default".
Greek Finance Minister Evangelos Venizelos told Reuters on Monday he intended to return to market financing of 2014.
Most investors do not think that will happen without a deep restructuring to make sustainable the Greece's debt mountain and remove it from the downward spiral of constant deficit-cutting that will destroy any possibility of economic recovery.
"For Greece, access is the only solution," said Kommer van Trigt, a bond fund manager with Robeco Group, handling about 40 billion euros (57 billion dollars)
Silberston said that the "first" was as close as France's proposal for a voluntary rollover of Greek debt seemed to be gathering momentum. But that would not solve the problem of solvency of Greece.
With debt had reached 1.6 times its 2011 economic production, economists say that Greece would need a primary surplus of the budget by about 5 percent of gross domestic product, compared with 5 percent primary deficit last year, just to stabilize its debt at current levels.
On the assumption that the debt ratio of Greece would peak at 166 percent, evolution securities calculations Show a haircut of approximately 64 per cent would be needed to bring the relationship to the ceiling of 60 percent agreed in the Maastricht Treaty of the EU.
The curve of Greek debt completely in a haircut of 50 percent on average, according to UniCredit. But by forcing the loss of bondholders before getting credibility can be in vain.
Silberston of Investec said besides a haircut, he would like to see several quarters of primary budget surpluses achieved in a sustainable way and not through revenues from privatization-before you buy Greek debt.
"The big problem with a haircut, was that ... you still need to have a very high premium for people to buy Greek debt after this date, because if you look historically haircuts, tend to not be in isolation," said Jack Kelly, Director of investment securities of global state at Standard Life investments, which manages assets worth £ 157 billion (250 billion dollars).
CHEAP IS NOT ENOUGH
After an immediate default Greek was avoided with 12 billion emergency loans and a fresh round of belt-tightening measures agreed in Athens, made on some of its debts have fallen by more than 200 basis points.
But more than 27 percent for two years and 16 percent for the 10 years are still punishingly high. Only short-term investors were behind the rally, which was exacerbated by thin volumes.
Kelly said the Standard of living, which sold its holdings latest Greek debt in June 2010, only I would buy back if rejoined investment grade or as part of a common EU, something Germany has ruled out.
Although the vote above junk, Portugal and Ireland, bailed out other euro area countries, are considered a no-go by investors of long term debt due to the risk they dragged with the Greek crisis.
But those countries have the possibility to change things faster than Greece. The best place is the Ireland, whose exports are more competitive and their labour markets more flexible.
"The numbers are a little better for Portugal and Ireland," said van Trigt Robeco Group. "At this point we are not actually differentiating between Greece, Ireland and Portugal. Going forward, a country like Ireland has a better starting position. "
THE RIGHT PRICE
With timing and magnitude of any haircut Greek debt difficult to predict because politics plays a major role in mathematics, it is difficult to assess what price I would draw investors back into Greece.
Is a town in 2003, when restructuring the price for its 2012 bond passes from about 40 to 60 cents immediately after Uruguay's debt event.
Link to June 2020 of Greece crafts to 55 eurocents.
"At A price of less than 50, there will be value in eight or nine years bonds (Greek) at some point," said Ciaran O'Hagan, strategist at Societe Generale. "But it only when accounts are sustainable, for example through the restructuring."
Only that keeps well if Greece avoid default is unilateral and messy as the Argentina in 2002. He organized the great debt swap in 2005 and in 2010, but is still closed debt markets.
Market prices before each haircut could offer opportunities to purchase vista that bondholders Greeks were too pessimistic about the extent of such a move. But it would be useful, as Greece can bail out investors shortly after and their spending would be small.
"Who would just incredibly hot money," said Robert Talbut, chief investment officer at the Royal London Asset Management, which manages assets worth 40 billion pounds (64 billion dollars). He added that he would not take that risk. ($ 1 = 0.626 British pounds) ($ 1 = € 0.705)
(Edited by Ruth Pitchford/Mike Peacock)
21:17
societynews[dot] org
