Everybody chill – Grexit is not really imminent

by John Dizard

Financial Times
May 20, 2012

There has been an astonishing quantity of nonsense written in the past couple of weeks about the prospect of “Grexit”, or Greece’s exit from the euro. That could be expected from people outside the eurozone, unfamiliar with the theological doctrines of the single currency, but I have been surprised by the depth of ignorance betrayed by soi-disant members of the European elite.

To summarise: Grexit is not imminent. The rise of the “anti-memorandum” Greek left-wing coalition works in a number of ways to the benefit of the troika (the International Monetary Fund, European Central Bank and European Financial Stability Facility). The newly issued Greek PSI (private sector involvement) bonds are probably cheap at today’s prices.

Last Tuesday, as I had suggested it would, the Greek government paid €435m to the holders of a maturing floating rate, English law, bond issue. The bondholders, among whom were heirs of the American Dart plastic coffee cup fortune, had chosen to be “holdouts”, refusing to tender into Greece’s exchange offer. I hear much of the speculator-holdout position was bought at between 60 and 70 cents on the euro. So they did well, though at that fairly high entry level, the position required nerves of iron. But then the Darts have good lawyers.

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