Time to Pay the ECB, Greece!

MarketBeat
WSJ.com's inside look at the markets
March 16, 2012, 7:38 AM
Time to Pay the ECB, Greece!
By Charles Forelle
http://blogs.wsj.com/marketbeat/2012/03/16/time-to-pay-the-ecb-greece/

With all the excitement over the Greek bond swap, we’d forgotten about the European Central Bank’s holdings, which we detailed a few weeks ago here.

Remember, the ECB (and the euro-zone national central banks) didn’t “participate” in the Greek debt exchange, though they had more than €50 billion in Greek debt. Rather, Greece arranged a side deal in which the central banks exchanged their bonds for new ones that are identical in all material respects–except the issue date, which was changed to 2012. Thanks to that difference, they weren’t covered by the restructuring, which included only bonds issued on Dec. 31, 2011, or earlier.

Nicely done.

Now the two versions of same old bond are getting very different treatment.

Credit Suisse’s fixed-income research team points out in a note this morning that the first bill is coming due. The famous March 20 bond–the €14.5 billion issue that Greece didn’t have the money to repay–matures next week. Most of the holders were private creditors. They’ll get nothing next week. Instead, they’ve received some cash-like securities and a withered package of new bonds that doesn’t begin maturing until 2023.

The ECB and the national central banks still hold €4.7 billion worth of the March 20 bond; they’ll get their money back on Tuesday.