I GOT THIS ONE WRONG!
The down grade on that day was, I now realise, to National Bank of Greece’s debt, the country’s biggest private bank and most of its other big banks as well. I’m afraid I read National Bank of Greece and mistook this for the central bank. Bad mistake! SORRY!
However, it turns out that In fact today, 22 April, Moodys DID downgrade Greek Sovereign rating but only to A3. But A3 is only one grade above the Baa rating I was talking about. SO this means the comment I made in this post while it was wrong when I wrote it, is now very close to coming true.
Once again SORRY FOR THE MISTAKE. But watch for this story in the press in the coming few weeks.
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Things are now getting pretty serious for Greece. They have just been downgraded by Fitch to BBB-. Now this corresponds to Moody’s rating of Baa. Which arcane as it sounds could be nastily significant.
I wrote about this back on Feb 16th in “Why Greece is just the start”. It was about certain SIV’s that Greece and others bought from Goldman and the other vultures.
One of the larger SIV’s Greece bought is called Titlos. It involves ‘borrowing’ 5.1 Billion Euros. It was arranged by GoldmanWhy people name these things I don’t know. It strikes me as a little perverse. Would you give your mortgage or car loan a name?
Anyway, I digress. The point of this post is this – Some of these SIV’s have clauses in them that require the borrower to post capital against the loan/SIV IF some condition is met. In the case of Titlos the condition is if the Greek government’s debt or Titlos itself suffers a downgrade to Baa (That’s Moody’s rating.)The clause says Greece has to post the whole 5.1 Billion Euros IMMEDIATELY.
Well guess what? Greece just got downgraded by Fitch to BBB- which is their equivalent of Baa.
Now I haven’t heard any news about this. Which could mean it just hasn’t hit yet but will when the paper makes it’s way to the correct desk, or that some deal has been struck to avoid catastrophe. Because that is what it would be. Greece has 5.1 Billion. JUST. But the news that something large like this blew up at one of the ‘too connected to lose’ banks is exactlöy the kind of news which blew Lehman out of the water.
I’m just saying, that’s all.
Has anyone noticed that "Titlos" is an anagram of "lost it"?
I draw your attention to the closing paragraphs, predicting a two tier country
http://www.thisislondon.co.uk/standard/article-23824827-a-dragon-has-put-non-doms-back-in-the-spotlight.do