Moody’s…wait and see

Dan Hannan tweeted this morning to ask how long it would take for the markets to give up on the ‘comprehensive’ bailout ‘agreed’ last week. I tweeted back to say 2 out of 3 ratings agencies already have. I am also staying close to Moody’s: I think they’re waiting for the next stage of restructuring formality to make their move.

Predictably, Athens is saying they ‘expected’ the downgrades so far awarded. I’d imagine they did, but it’s funny how the D-word was never used until the raters said it. Equally funny is the defeaning silence from Brussels, Frankfurt and Berlin….where Merkel yesterday passed the Act required to enable the bailout, and then helpfully added that there was no certainty it would work. That’s Geli for you: always a foot in both camps….We Never Make Mistakes.

Here’s the key phrase from the S&P downgrade – my emphasis:

‘If enough bondholders do not accept the bond swap offer, Greece would be deemed to be in outright payment default’

So for the bondholders as a whole, it’s very soon going to be put up or shut up time. S&P declined to elaborate on the word ‘enough’ – we all need a little wriggle room – but it is pretty clear that there will be some holdout….and of course, nobody engaged in this tomfoolery has audited the Hedge Fund sentiments at all. My gut says Dalloran will deliver the IIF membership, but with Hedgies, you never know.

Even assuming the bondholder involvement is ‘enough’, there are still plenty of poison pills in there.

It will not make it to the tape.