So what would happen if Greece defaults or goes through a hard restructuring?

With the 2 year Greek notes now yielding 29% and Europe likely to postpone its decision on what to do with Greece we thought that it best be prudent to look at the impact of Greece defaulting on its bonds would be on the Thai Equity Market.

Just quickly:

  • Japanese banks hold $500 million
  • Spanish banks hold $600 million
  • US Banks hold $1.8 billion
  • Italian Banks hold $2.6 billion
  • UK Banks hold $3.2 billion
  • French Banks hold $19.8 billion
  • German Banks hold $26.3 billion
  • Other Eurozone countries hold $15.7 billion

Source: Bank for International Settlements

Just recently:

  • Four of Greece’s largest banks have been downgraded by the S&P
  • Moody’s puts Soc Gen, BNP Paribas, and Credit Agricole on downgrade review because of their exposure to the both Greek economy and the country’s banking sector.

So what?

  • Greece defaults/has a hard restructuring
  • Flight to US treasuries and yields
  • Eurozone banks face need to raise capital, some may even have to face bankruptcy/nationalisation/sold to other banks
  • Liquidity crisis
  • Euro drops in value
  • USD increases
  • Equities/commodities drop sharply

What can we do?

  • Hold cash and be patient until the ECB comes out with a more definite roadmap

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