Greek Debt Swaps

Greek debt investors face huge losses if their bond holdings are required to be converted following a default. Payouts have not yet been triggered but plans for payout are on the horizon. The payout anxiety follows laws passed this week that would force write downs and conversions on the country's bond holdings in the effect of a default.

The author reports bondholder write downs of 53.5% for private sector investors. Additionally, bondholders would be required to swap their holdings with new bonds that have longer maturities and lower coupons. These write downs and conversions would provide payout aid for Greece but cause significant bondholder losses.

This is just one hurdle for the debt riddled country as it faces further discussions with its Eurozone counterparts. Eurozone leaders would like to create a plan that would alleviate further future defaults, provide aid to Greece for their payout requirements, and limit the losses to bondholders.

Wall Street Journal
Greek Debt Swaps Explained

ECB's LTRO Has Little Impact on Risky Assets

The European Central Bank (ECB) gave the Eurozone another huge boost this week. The central bank offered 529.5 billion euros ($712.8 billion) in three year loans to 800 of the region's banks.

The ECB's lending strategy, known as the LTRO or Long Term Refinancing Operation, provides term loans to government banks at low market rates. The LTRO lending program is designed to ease liquidity pressures on Eurozone banks by providing them with lower rate loan options.

The offering is the second of its kind by the central bank. The first offering, last December, helped to rally Spanish and Italian bonds. So far, the second offering has minimally impacted risky assets in Spain and Italy but the ECB is hoping the second offering will have broader effects on rate offerings in Eurozone government bond markets.

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Banks Use ECB Loans to Suit Own Needs
ECB's LTRO Has Little Impact on Risky Assets

Greece Rated in Default

Wall Street Journal
S&P Declares Greece in Default

New Push for Reform in China

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New Push for Reform in China

Greece is about Politics and Not Numbers

Wall Street Journal
Greece is about Politics and Not Numbers

Price-Rise Plateau

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Price-Rise Plateau

Dow Passes 13000

The Dow has risen 6.1% over the past seven weeks. With crude-oil prices reaching nine month highs, oil companies are the leading contributors to the Dow's gains. Bullish speculators see attractive stock valuation levels and improving consumer sentiment fueling further market accelerations. However, euro-zone debt woes and bank lending requirements continue to weigh on investor sentiment.

Wall Street Journal
Dow Touches 13000 but Can't Hold On