Greek "Haircut"

EU Sets 50% Greek Writedown, $1.4T in Rescue Fund


European leaders cajoled bondholders into accepting 50 percent writedowns on Greek debt and boosted their rescue fund’s capacity to 1 trillion euros ($1.4 trillion) in a crisis-fighting package intended to shield the euro area.

The 17-nation euro and stocks climbed while bond spreads narrowed after leaders emerged early today from a 10-hour summit in Brussels armed with a plan they said points the way out of the quagmire, albeit with some details still to be ironed out.

“Overall the outcome is better than we anticipated one week ago,” Laurent Bilke, global head of inflation strategy at Nomura International Plc in London, said in an interview. “There are several issues left open, but I do believe that getting a more necessary debt relief for Greece is a pretty important step.”

Last-ditch talks with bank representatives led to the debt- relief accord, in an effort to quarantine Greece and prevent speculation against Italy and France from ravaging the euro zone and wreaking global economic havoc. Greek Prime Minister George Papandreou will address the nation at 8 p.m. in Athens to outline the summit’s ramifications for the country at the eye of the two-year sovereign debt crisis.

Merkel: 50 pct haircut to cut Greek debt by 100 bln euros


Private owners of Greek bonds will accept a 50 percent writedown on their investment, enabling both a 100 billion euro cut in Greece's sovereign debts and allowing a new Greek programme of aid of 100 billion euros, German Chancellor Angela Merkel said on Thursday.

"Our goal is that the debt of Greece by 2020 is 120 percent (of GDP)," Merkel told journalists after a meeting of euro zone leaders.

"A nominal haircut of 50 percent has been agreed. On the basis of this, we will have a new programme for Greece with a value of 100 billion euros."

She said the public sector would make a further 30 billion euro contribution towards private sector participation.

Comment: The operative word is "cajoled". Of course 50% is better than nothing!


  1. Sounds like much is still to be worked out

    Europe's Not-So-Grand Plan

    it falls far short of the "comprehensive plan" that euro-zone leaders had promised and investors had been demanding. On all three main measures—restoring Greek debt sustainability, increasing the size of the bailout plan and recapitalizing the banks—key details remain to be worked out. Previous Grand Plans unraveled within days under the glare of market scrutiny; the best hope is that this deal buys a little more time.

    The only significant new element to emerge from Wednesday's euro-zone summit was the decision to ask Greek private-sector bondholders to accept a 50% haircut on their exposures. The euro zone believes this can be achieved on a voluntary basis, thereby avoiding triggering credit-default swaps. But the deal will still leave Greece with debt equivalent to 120% of GDP by 2020—far above what many would consider sustainable. That will inevitably fuel concerns that the Greek debt saga still isn't over.

  2. Yup!

    Greece euro zone entry was "error" at time: Sarkozy

    Shouldn't have let deadbeat into "the club".

    Nations that decided NOT to join now rejoicing:

    Enlargement of the European Union


Any anonymous comments with links will be rejected. Please do not comment off-topic