Greece - debt swap a good idea?
from washington post:
Heavily indebted Greece and its bondholders have agreed on a debt swap that would reduce the face value of their holdings by 53.5 percent. Bondholders — banks, insurance companies, and investment funds — are offered new bonds that are worth less, have a longer time to be paid off and bear less interest. The debt reduction is one condition of Greece getting a second, €130 billion ($173 billion) bailout from other eurozone countries and the International Monetary Fund.
Thoughts?
Not sure why some would accept this, most hedge funds have these bonds insured as their hedge, so are guaranteed 100%.
I think its also BS how none of the bond holders can initiate their CDS's......... Greece needs to default, there is no way they are getting out of this mess. All they keep doing is taking on more and more debt and dragging down the rest of the eurozone. I am tired of reading/hearing about them in the news. You can only keep someone on life support for so long....
This is what happens when you do business with a government and don't have an ace up your sleeve. Whenever you deal with powerful people, you have to have some way to twist their arm...otherwise they will usually fuck you. Never trust governments, especially shitty banana repbublics like Greece, to keep their end of things up.
examples?
As for the people who are insured, they're insured in the event of a credit event. If the legal terminology doesn't use the word 'default' they're going to try to make the case that the insurance doesn't apply. Honestly, I feel bad for whoever put their money on Greece.
Hedge funds and other institution should just learn from MF Global and Corzine and stop making stupid bets on Europe.
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