Zero Hedge discussed a few months ago the fact that the ratings agencies consider distressed exchange offers essentially equivalent to an event of default. If that is the case, then Raiffeisen Bank is basically bankrupt: one of Austria's biggest banks with massive Eastern European exposure has recently launched an exchange offer for €500 million of notes (ISIN: XS0253262025) at 55 cents on a dollar, to be exchanged into new notes yielding 15%!
Apparently RZB has not mastered the art of running equitizations, which the phenomenal brain trust of Larry Summers came up with as pertains to Citi and BofA to give the impression that all is good. Alas, with no interested buyers of financial company sub notes, underwriters BNP and UBS may have their work cut out for them. Also, RZB which was hoping to book a quick profit on the exchange of notes (in, ahem, exchange for a crippling interest rate down the line), may end up having to face its toxic asset demons and actually write down the value of its Romanian baking soda factories to FMV, i.e. 0 +/- 10. At this point anything they do will only delay by a few months the inevtiable collapse of the Austrian economy.
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