Greece Bondholders May Lose $265 Billion as S&P Sees 70% Loss

[ASusilovic]

April 28 (Bloomberg) -- Holders of Greek bonds may lose as much as 200 billion euros ($265 billion) should the government default, according to Standard & Poor’s.

The ratings firm cut Greece three steps yesterday to BB+, or below investment grade, and said bondholders may recover only 30 percent to 50 percent of their investments if the nation fails to make debt payments. Europe’s most-indebted country relative to the size of its economy has about 296 billion euros of bonds outstanding, data compiled by Bloomberg show.

The downgrade to junk status led investors to dump Greece’s bonds, driving yields on two-year notes to as high as 19 percent from 4.6 percent a month ago as concern deepened the nation may delay or reduce debt payments. Prime Minister George Papandreou is grappling with a budget deficit of almost 14 percent of gross domestic product.

“It’s now not just market sentiment, but a top rating agency sees Greek paper as junk,” said Padhraic Garvey, head of investment-grade strategy at ING Groep NV in Amsterdam.

Before yesterday, Greece’s bonds had lost about 17 percent this year, according to Bloomberg/EFFAS indexes. The 4.3 percent security due March 2012 fell 6.54, or 65.4 euros per 1,000-euro face amount, to 78.32.

Relative Ratings

S&P’s reduction of Greece puts the nation’s debt on par with bonds issued by Azerbaijan and Egypt. Moody’s Investors Service rates Greece A3, while Fitch Ratings puts it at BBB-.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aohUU1Q3D3fw&pos=5

Seems,a partial default may be unavoidable...

 

[nazzdack]

Quote from ASusilovic:
Seems, a partial default may be unavoidable...

No. It's "all or none". No shades of gray!

 

[Martinghoul]

*EU: DEBT RESTRUCTURING FOR GREECE `NOT AN OPTION'

 

[Lethn]

Am I the only one who would be genuinely interested in seeing what a country defaulting would be like? Frankly I want to see what all the huge fuss is about because the Federal Reserve in particular seem almost rabidly against anything like this happening.

 

[Martinghoul]

Quote from Lethn:

Am I the only one who would be genuinely interested in seeing what a country defaulting would be like? Frankly I want to see what all the huge fuss is about because the Federal Reserve in particular seem almost rabidly against anything like this happening.

Firstly, be careful what you wish for, 'cause you might just get it. There are a few cases you can draw upon. There's Lehman, as well as some sov defaults in EM that can be a somewhat useful benchmark. You can read more about the latter in the attached doc.

Secondly, this has nothing to do with the Federal Reserve.

 

[nazzdack]

Quote from Lethn:
....a country defaulting, what would it be like? Frankly I want to see.....

Greece could become the 51st state of the USA! Imperialism returns! :eek:

 

[Ghost of Cutten]

Quote from Martinghoul:

*EU: DEBT RESTRUCTURING FOR GREECE `NOT AN OPTION'

Technically speaking, they're right. After all, an option implies some degree of choice

 

[Debaser82]

The ECB should buy Bernanke. He'd know how to solve this.

And he get's paid what, 180K a year?

Offer him four times the amount and he'd bite.

 

[shortie]

April 28 (Bloomberg) -- Holders of Greek bonds may lose as much as 200 billion euros ($265 billion) should the government default, according to Standard & Poor’s....[/b] [/B]

do i read it correctly that if Greece defaults it will eclipse the Argentinian default that was the largest default ($80B) in the recent history?

 

[Martinghoul]

Quote from shortie:

do i read it correctly that if Greece defaults it will eclipse the Argentinian default that was the largest default ($80B) in the recent history?

Will all depend on the recovery, i.e. the actual PV haircut the investors are forced to take.