Greece'S Debt Default Is Almost Certain &Nbsp; The Market Will Face Turbulence In The Coming Weeks.

In July 25th, rating agency Moodie announced another reduction. Greece The Treasury rating also claims that Greek debt is facing Default because the EU's new bailout measures will bring considerable losses to investors.

Since the euro zone issued the second batch of aid measures to Greece in July 21st to determine the responsibility of private investors to bear 50 billion euros, Fitch and the S & P rating agencies have announced in succession that they will bring Greece to Greece. National debt Transferred to default level.

At the same time, a senior EU financial official also hinted that when the measure was introduced, the EU realized that the breach of contract was inevitable. "The new measures are a comprehensive and systematic response, but I do not think that this will immediately eliminate market pressure and the market turbulence in the coming weeks is not surprising."

So far, the euro zone's first default in 12 years is almost certain. It will take place at the beginning of the operation of Greek bonds with the holders of government bonds, the beginning of the repurchase of government bonds or the exchange of bonds. It is reported that within a few weeks Greece will appoint consultants and holders to hold consultations, and the first working meeting with investors will be held in Athens in July 28th.

According to the information of the International Finance Association, there are 29 financial institutions willing to participate in the rescue. Most of them are European banks or insurance companies. Large banks such as Paris bank and Deutsche Bank are listed among them. Non European banks only have 4 from Turkey, Canada, Kuwait and South Korea.

Reducing GDP12%'s debt burden

In July 25th, Evangelos Vassilios Mimarakis, the Greek finance minister, started a series of talks in Washington. He met with American finance minister Geithner, International Financial Association executive director Da La ray, IMF President Lagarde and IMF. The issue was the EU's rescue measures and the Greek own reform plan.

In accordance with the consensus reached on the 21 day euro zone leaders summit, the participation of private investors will reach 90%, and the contribution from private investors will be 50 billion euros.

According to the political consensus, private Investor On average, it will take 21% of the losses, and at least reduce Greece's debt burden by 13 billion 500 million euros, which is 12% of Greece's GDP.

According to the information disclosed by the European bank stress test in July 15th, Greek debt 66% is held by Greek banks, 9% by German banks, and 8% by French banks. A total of 29 financial institutions are willing to participate in support projects in Greece. Moodie had warned France's three largest banks about Greece's debt exposure, and in 29 institutions, the Bank of Paris and

Societe Generale is listed, but agricultural credit bank has not yet participated in it.

Deutsche Bank, Commerzbank and Bayern LB are also on the list in German banks; Standard Chartered Bank, HSBC, Spain external bank and Credit Suisse and other 4 banking giants and their own Greek banks are also participating in the project.

At present, the Greek authorities are responsible for holding consultations with these national debt holders. After mutual reporting, investors will ultimately decide their participation and participation. Now there are 4 tools, including bond exchange and debt extension. At the same time, the Greek authorities will also design a debt repurchase scheme worth 20 billion euros. Because the current market value of treasury bonds is lower than the issuing price, the net contribution of repurchase will be 12 billion 600 million euros.

The EU officials said that because the participation of private investors was based on the principle of voluntariness, the authorities were very conservative in calculating the contribution of private investors, and the final contribution could exceed 50 billion euros.

The three largest rating agencies believe that, regardless of the form of investors to achieve in the end. participate in Investors will face considerable losses. Moodie, 25, said Greece would default on one hundred percent.

After default, the measures have been set.

Greek debt will face default after the second batch of relief measures, which is almost the default fact of EU officials.

Faubion Zuleg, chief economist of the center for European policy, told reporters that even with Greek debt default, the Bank of Germany and France were fully capable of digesting losses, because the holders of government bonds had sharply reduced their exposure to Greek debt since the start of the debt crisis. The real problem is Greece's domestic banks, all of which are focused on Greek banks.

Previously, the European Central Bank insisted that Greek bonds would not be accepted as a qualified collateral once a default occurred. This means that the Greek banks, which rely mainly on mortgage bonds to get liquidity from the European Central Bank, will face chain breaking. Therefore, in the new round of rescue, 20 billion euros will be used for re injection of Greek banks.

The European Union officials also said they would produce 35 billion euros of temporary funds to ease the ECB's concerns about the quality of collateral. "We believe that Greece's default will be limited to only a few days. The 35 billion euro is to make up for the difference between its default and the acceptable level of the European central bank".

He also said that because the European Union believed that Default This is only a short period of time, so the 35 billion euro is not included in the 109 billion euro official loan.