Goldman Issues Press Release On Greek Swaps, Pours More Gas On PR Fire
Full press release from Goldman Sachs giving the company's perspective on the recent topic du jour about its arrangement of numerous Greek currency swaps. One wonders why pour more gas on the pr nightmare fire, if indeed everything was according to the books. One also wonders just how many of the "European member states with foreign debt outstanding" that performed comparable transactions will be presented as a shocker to Eurostat, which at last check was only 7 years behind the curve.
Goldman Sachs Transactions with Greece
February 21, 2010
Greece, like most countries in Europe, uses the international debt markets to meet its financing needs, in addition to borrowing in the domestic market. As a result, many countries have significant amounts of debt denominated in foreign currencies. Greece actively accessed both the Japanese Yen and US Dollar markets, amongst others.
Following Greece’s decision to join the European Monetary Union and adopt the Euro (which, under the criteria set by the European Union, included a debt-to-GDP ratio of less than 60%), reducing the size of foreign denominated liabilities became a priority for Greece, as it did for most European sovereign states.
In December 2000 and in June 2001, Greece entered into new cross currency swaps and restructured its cross currency swap portfolio with Goldman Sachs at a historical implied foreign exchange rate. These transactions reduced Greece’s foreign denominated debt in Euro terms by €2.367bn and, in turn, decreased Greece's debt as a percentage of GDP by just 1.6%, from 105.3% to 103.7%.
The Greek government has stated (and we agree) that these transactions were consistent with the Eurostat principles governing their use and application at the time.
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