Welcome to the new version of European Tribune. It's just a new layout, so everything should work as before - please report bugs here.
Display:
that I was afraid to ask :

why would a sane bond-holder accept a "voluntary" bailin?

The Nonsense of purely voluntary Bail-ins

A purely voluntary maintenance of exposure at current market rates would make the sovereign's debt even more unsustainable and, in time, will ensure a default on the new bonds. The only way to prevent the coupon/yield on the new bonds from being close to market rates and thus unsustainable would be to provide the new bonds with seniority or some collateral; but both options are undesirable as a rollover is not a case of "debtor-in-possession" financing and thus doesn't justify such credit sweeteners.

 

If, instead the rollover occurs at original coupon or well below market rates, so as to provide Greece with some debt relief, the rollover option is not purely voluntary and has coercive elements; thus, it is not different in any substantial way from the orderly debt restructuring, or reprofiling, that the ECB and other official sector folks so vehemently oppose.



It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Thu Jun 16th, 2011 at 09:56:06 AM EST
[ Parent ]

Others have rated this comment as follows:

Display:

Top Diaries

The new Greek government program

by talos - Feb 23
169 comments

Two-thirds gone

by DoDo - Feb 22
6 comments

Did Schäuble win?

by Migeru - Feb 21
252 comments

LQD - On Monetary Structure

by ATinNM - Feb 20
13 comments

Varoufakis and the memorandum

by Migeru - Feb 13
88 comments

After EU

by DoDo - Feb 12
261 comments

Recent Diaries

The new Greek government program

by talos - Feb 23
169 comments

Two-thirds gone

by DoDo - Feb 22
6 comments

Did Schäuble win?

by Migeru - Feb 21
252 comments

LQD - On Monetary Structure

by ATinNM - Feb 20
13 comments

Varoufakis and the memorandum

by Migeru - Feb 13
88 comments

After EU

by DoDo - Feb 12
261 comments

Greece's Plan B?

by Migeru - Feb 3
266 comments

Deflationary QE

by afew - Jan 28
31 comments

More Diaries...

Occasional Series