Sunday, January 15, 2012

Reuters: Who profits from Greek debt deal?

Greece's government is asking its creditors to accept a 50 percent reduction (haircut) in the principle amount owed to them.

The major creditors, mostly hedge funds, are still holding out, they won't accept Greece's offer.

It's interesting to note that the original creditors or holders of Greece's debt got out a long time ago and sold their bonds for anywhere from 20-45 cents on the euro, depending on the maturity of the bond, to these risk-loving hedge funds. So if the new owners of the debt accepted a 50 percent haircut, they would still make a profit.

It's just important to keep in mind that many of those who originally took the risk of buying Greece's debt have left the picture, and took a 55-80 percent loss just to be done with it. That is, "the market," which knows everything, has already written down the street value of Greece's debt.

January 13, 2012 | Reuters

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