Three months that will test the Eurozone | 223 comments (223 topical, editorial, 0 hidden)

Greek debt restructuring to involve 40 to 50% haircuts
The German weekly Die Zeit quotes EU sources as estimating the size of a potential haircut for Greece of 40 to 50% to ensure debt sustainability. The paper reports that various options were under consideration now, including a simple maturity transformation. Moritz Kraemer of S&P is quoted in the article as suggesting a size of the necessary haircut of 50-70%, adding that a simple rescheduling would not provide sufficient debt relief. He said a restructuring is only worth doing if the debt is reduced to a sustainable level - considering the price a country has to pay for a restructuring of debt is very high in terms of lost market access.

Talking to Die Welt Wolfgang Schäuble said that he expected a detailed debt sustainability study for Greece to be prepared by the Commission and the ECB. "We will have to do something should this report conclude that the debt sustainability is in doubt", the finance minister said referring to "further measures" that would have to be undertaken. However Schäuble also stressed that up until 2013 private creditors could only be subjected to voluntary debt restructuring. After 2013 private creditors would have to expect to automatically part of restructuring.

Why wasn't a debt sustainability study done a year ago? Anyway, better late than never.

And what is it about 2013?

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Thu Apr 14th, 2011 at 04:06:38 AM EST
[ Parent ]

2013 may give the banks... (none / 1)

... enough time to quietly shift their liabilities onto the public balance sheet, so a ~~public~~ publicised bailout can be avoided.

The fact that the collateral damage from such a PR exercise includes several Mediterranean economies does not seem to overly concern Die Seriöse Leute.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Apr 14th, 2011 at 05:22:33 AM EST
[ Parent ]

Re: 2013 may give the banks... (none / 0)

Exactly.

by kjr63 on Fri Apr 15th, 2011 at 03:32:58 PM EST
[ Parent ]

Re: German banks (4.00 / 2)

First year after the end of the world, so a safe place to punt to.

by afew (afew(a in a circle)eurotrib_dot_com) on Thu Apr 14th, 2011 at 05:36:03 AM EST
[ Parent ]

Three months that will test the Eurozone | 223 comments (223 topical, 0 editorial, 0 hidden)