in repo/shadow banking stories, this on Egypt is quite bonkers: in 2016, to get an IMF loan, Egypt had to increase its international reserves.
HSBC offers a $2 billion structured repo trade, as follows.
risk.net/awards/5360881…
HSBC offers a $2 billion structured repo trade, as follows.
risk.net/awards/5360881…
HSBC offered $2 billion in return for $4 bn Eurobond sovereign bond collateral (a 50% haircut) and an undisclosed cash margin.
problem? Egypt had no Eurobonds (dollar debt) to pledge as collateral, shut out of international capital markets
problem? Egypt had no Eurobonds (dollar debt) to pledge as collateral, shut out of international capital markets
Ministry of Finance issues $4 bn in Eurobonds, which it transfers to central bank to pledge to HSBC.
Lots of busy lawyers trying to untangle this from 'monetary financing' or MMT echoes that would unsettle IMF, an institution that doesnt like overt coordination cb-treasury
Lots of busy lawyers trying to untangle this from 'monetary financing' or MMT echoes that would unsettle IMF, an institution that doesnt like overt coordination cb-treasury
👀👀👀
similar @Brad_Setser apparently, to Ecuador - though details unclear from that Bloomberg piece (seems ended because Ecuador couldnt meet margin calls?)
https://twitter.com/RivettiDiego/status/1317145445274177536?s=20
even more bonkers, it seems Ecuador's Ministry of Finance repoed its own bonds with Goldman in a four year deal, and paid it the 6.55% in repo rate.
Cheaper than the 9.63% it was paying itself as legal owner of that bond collateral.
Cheaper than the 9.63% it was paying itself as legal owner of that bond collateral.
the details of Ecuador's 2018 repo deal with Goldman Sachs are fascinating:
- Ecuador making exchange rate bets (USD/EUR)
- GS paying Ecuador interest on Ecuador collateral three days before Ecuador had to pay itself that interest!!!
- Ecuador making exchange rate bets (USD/EUR)
- GS paying Ecuador interest on Ecuador collateral three days before Ecuador had to pay itself that interest!!!
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