Με CDS η εξασφάλιση των “Ταράνδων”!! Μάλλον δώ σατε εγγυήσεις κύριε Βενιζέλο, ε;

Ολυμπία καλημέρα

Αυτή ήταν μάλλον η εξασφάλιση που έδωσε ο Βενιζέλος στους Φιλανδούς. Εξασφάλιση με έκδοση cds όχι όμως από το κράτος αλλά από τις τράπεζες.. Ε ρε γλέντια

Some MPs expressed shock that the Ministry of Finance decided to keep the collateral

The English-language version has been available to MPs to read, but only under heavy guard.

“All MPs need to have a genuine possibility to acquaint themselves with documents that are important from the point of view of making decisions, and in their own mother tongues”, said Markus Mustajärvi of the Left Group.

[True Finns party leader Timo] Soini said that the Belgian culture of secrecy has now arrived in Finland.

The background here: Finland has made a collateral deal (loads of earlier false starts) with Greece given its involvement in the second bailout (therefore from a northern eurozone country’s point of view, an involvement in credit risk).

The deal’s not a total mystery, but details are lacking. What’s more, they are lacking when it’s pretty clear that the Greek bondholders tendering into PSI — who’ve been promised ‘co-financing’ of their new bonds alongside EFSF loans — should at least be aware of what’s going on here.

Reuters reported on 15 February that Greek banks would provide cash and “highly rated” assets to an escrow account over time, constituting collateral for a portion of Finland’s guarantee on loans to Greece. Now, a note from the Finnish government to parliament mentions the agreement being signed on 20 February.

But the note says that the deal works in the following way. The Greek banks release “Greek government securities” to a trustee (an “international investment bank”) which sells them in the market. The trustee puts the revenues into this escrow account (possibly, but we’re not sure, in the form of “safe bonds”).

We’ve also found a diagram (in Finnish) of how it generally works, from a finance ministry presentation:

Also, since the process kicks off with Greek government bonds, the note adds this:

Greek government bond liquidity is currently weak, and therefore is not legitimate to try to sell them on the market all at once. Transaction will be implemented in phases so that the agent sells the bonds in installments during the years 2011[sic?]-2014

So what have we got here? And, what details are missing?

As a banker quoted by Reuters said, it’s a little bit like Greek banks selling CDS on Greece to Finland. (It would be a fully funded CDS, i.e. the notional amount will be transferred to an account by the seller. We suppose.)

An FT Alphaville reader who’s closely followed the Finnish collateral issue earlier told us it could also be compared to exchanging a credit-linked note, with the proviso that the Finnish government can’t use the collateral assets in the meantime. The Greek banks meanwhile get the assets back (plus i