Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
El-Erian from Pimco thinks that the creditors will have to enter the picture at some point. The ridiculous 20% yields are pie-in-the-sky for whoever bought them.

Since none of this Greek debt was initially sold for more than 5.9% or 6.2%, I suspect the payout to creditors will not be much beyond that.

So, the idea is to prevent a Greek default by making the creditors whole, as long as by whole it means the creditors don't lose money. The idea that people will be paid at market rates from IMF funds is perhaps fantastical.

by Upstate NY on Thu Apr 29th, 2010 at 11:03:02 AM EST
[ Parent ]
would be for Greece to buy its debt on the secondary markets at current distressed prices.

The current >10% yields simply mean that holders of past bonds sold them for much less than their face value, thus providing the new buyers with a higher yield. That means that past buyers of the bond have already taken losses by selling at less than their official value.

Wind power

by Jerome a Paris (etg@eurotrib.com) on Thu Apr 29th, 2010 at 04:26:48 PM EST
[ Parent ]
Is this really the case?

Are we really talking about bailing out an indirect bet?

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Thu Apr 29th, 2010 at 04:44:12 PM EST
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Greece needs cash to roll over maturing debt, let alone buy back the rest of it.

Buying the debt in the secondary market is what the ECB should have quietly been doing since February.

The brainless should not be in banking -- Willem Buiter

by Migeru (migeru at eurotrib dot com) on Thu Apr 29th, 2010 at 05:09:19 PM EST
[ Parent ]