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Greeks May Hold $510 Billion Trump Card in Renegotiation -
(www.bloomberg.com) Greece’s next
government may hold a trump card worth more than $510 billion if it heeds
voters’ demands to renegotiate its bailout with the European Union. The nation
owes about 400 billion euros ($517 billion) to private bondholders, public
bodies such as the International
Monetary Fund and European Central Bank and
other creditors, according to data compiled by Bloomberg. About 252 billion
euros of that’s due to official organizations that used their status to avoid
the losses suffered by ordinary bondholders when Greece restructured its debt
two months ago. Greek voters are demanding their leaders renegotiate the terms
of rescue packages that have imposed unprecedented austerity on the country
since 2010. One potential prime minister, Syriza party leader Alexis Tsipras,
has pledged to tear up the EU-led bailout agreement. With Greece owing a sum
roughly equal to Switzerland’s economy, the
fallout for taxpayers could be calamitous if the country walks away.
In Spain, a Debt Crisis Rooted in Corporate Borrowing - (www.nytimes.com) In a country with one of the highest levels of company debt in the
world, few businesses in Spain shoulder as big a burden asGrupo A.C.S., the global construction giant
whose debt woes have become a mirror image of Spain’s own increasingly severe
financial struggle. Saddled with a 9 billion euro ($11.7 billion) debt pile
that is twice the size of the company’s shrinking market value, A.C.S. is in
the midst of a frantic campaign to sell off assets, pay down debt and further
distance itself from a Spanish economy caught in a spiral of austerity and deflation. The Spanish government’s harsh budget cuts and
their depressive effect on the economy have prompted foreign investors to sell
Spanish stocks and bonds in droves. On Tuesday, Spanish stocks plunged 2.8
percent and the government’s 10-year bond yields spiked to 6 percent as Spain
moved to bail out its ailing banks, and uncertainty over Greece loomed.
Norway Dumps Ireland, Portugal Bonds on Euro Crisis - (www.bloomberg.com) Norway’s
sovereign wealth fund sold all its Irish and Portuguese government bonds after rejecting the
Greek debt swap and warned that Europe faces considerable challenges. The $610 billion Government Pension Fund Global returned
7.1 percent, or 234 billion kroner ($41 billion), as measured by a basket of
currencies, in the first quarter, the Oslo-based investor said today. Its
equity holdings gained 11 percent while its fixed-income investments rose 1.6
percent. The fund, which voted against Greece’s debt swap this year because it disagreed with being
subordinated to the European Central Bank, also said it reduced debt holdings
in Italy and Spain amid a broader
strategy to cut investments in Europe. The fund added government bonds from emerging marketssuch as Brazil, Mexico and India.
Spanish Banks Erode Creditors With ECB Loans: Mortgages - (www.bloomberg.com) Spain’s lenders are pledging some of their
best assets to raise record levels of secured funding, including from the European Central Bank,
eroding creditor safeguards at the same time the government is planning the
country’s largest bank bailout. Borrowing from the ECB rose 50 percent in March
from the prior month to 227.6 billion euros ($294.3 billion). Bankia Group is
among lenders that increased mortgage-backed debt issuance by 35 percent since
December 2007 to 535.1 billion euros, or 53 percent of their real-estate loans,
according to Spanish Mortgage Association data at
the end of 2011. Rodrigo Rato, Bankia
chairman, stepped down this week as part of a plan in which the government is
willing to inject public funds. Spanish lenders are increasingly depending on
the central bank and secured debt sales to lower funding costs after their return
on equity in 2011 was the lowest in more than four decades following the
country’s real-estate crash.
Mortgage
legislation splits California Democrats - (www.sacbee.com) The "60
Minutes"-style video climaxes with an assemblyman hustling through a
Capitol corridor and down a flight of steps, trailed by a constituent asking
where the lawmaker stands on controversial mortgage legislation. Assemblyman Felipe Fuentes, the Sylmar Democrat who
is the subject of "What Legalized Bribery Looks Like," says the piece
produced by liberal activists is a "lie." It also highlights how the
pitched political struggle over the future of California's mortgage law has roused
labor and activist groups into using guerrilla tactics to call out moderate
Democrats in an election year. "Embarrass and expose," said Steve Maviglio, a veteran Democratic
strategist and campaign consultant. "It's a very effective tool."
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