The Greek bail-out is little to cheer about

Everyone involved in the, what at times seemed interminable, €130bn Greek bail-out should take a bow. Greece will now make it through its March redemption date without spiralling into default. But it is hard to feel any more positive than that about the announcements. It’s worth remembering the numbers involved mean the Greek episode is in fact a mere sideshow compared to the rest of Europe’s debt slagheap.

  • 21 Feb 2012
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There are only a few routes definitively out of the European sovereign debt crisis — economic growth, inflation or default. Unfortunately, they are hard to travel while pursuing austerity policies in a single currency bloc. The lesson from this crisis is that austerity murders growth. Meanwhile default is still a taboo. That leaves inflation which we can only hope central banks will one day end up creating through QE and LTRO schemes.

Given the lack of measures that Europe can take to end the crisis, it has had to resort to a spectacular array of smoke and mirrors from Greek austerity packages, to EFSF sponsored co-investment funds and sovereign protection schemes, to private sector debt swaps. All have been finalised in recent days after an absolute age of wrangling over the technicalities.

The fact that these measures have become so complex and have thus taken so much manpower and time to put in place means too many people have been spending too much time focussed on an amount of debt that is but a detail compared to the bigger European picture.

That is not to belittle the misery being inflicted upon the Greek people regardless of whether you see them as victims or tax-dodging villains in all of this. Nonetheless with so much energy directed at Greece it is tantamount to an acknowledgement of the EU’s inability to fix its own wider problems.

The more important debt crisis resolution measures have been the injections of liquidity into the markets by the ECB and the Bank of England through the LTRO and Quantitative Easing. Do such measures risk causing an asset bubble and inflation? Sure. That’s the point. If you are not going to inflict a default on investors, there can be no better way of surviving a debt crisis than with a confidence boost and a healthy dose of inflation. And if any of that cash reaches the wider economy to generate some growth then that’s even better.

There are plenty of people in markets who think that Greece and the Troika will be back round the table before too long negotiating more bail-out cash after austerity yields, once more, poor results. Who can doubt them? As long as Greece can be kept on life support however, let us all hope that central bank liquidity schemes can do the heavy lifting for the rest of Europe over the long-term. Frankly, there isn’t much else on offer.

  • 21 Feb 2012

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 317,691.74 1201 8.90%
2 JPMorgan 291,227.96 1326 8.16%
3 Bank of America Merrill Lynch 285,088.11 991 7.99%
4 Goldman Sachs 217,749.25 714 6.10%
5 Barclays 209,291.80 811 5.87%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 HSBC 32,320.82 147 6.67%
2 Deutsche Bank 32,259.50 104 6.66%
3 Bank of America Merrill Lynch 28,890.43 85 5.96%
4 BNP Paribas 25,663.29 144 5.30%
5 Credit Agricole CIB 22,617.86 130 4.67%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 18,160.85 71 9.15%
2 Morgan Stanley 15,215.44 76 7.67%
3 UBS 14,195.29 55 7.15%
4 Citi 14,014.57 86 7.06%
5 Goldman Sachs 12,113.98 67 6.10%