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A DISORDERLY AND potentially devastating Greek debt default is looking much less likely after the country reached a tentative deal with private investors.
The agreement would significantly reduce the country’s debt and pave the way for it to receive a much-needed €130 billion bailout.
Negotiators for the investors announced the agreement yesterday and said it could become final next week. If the agreement works as planned, it will help Greece remain solvent and help Europe avoid a blow to its already weak financial system, even though banks and other bond investors will have to accept multibillion-dollar losses.
Still, it doesn’t resolve the weakening economic conditions in Greece and other European nations as they rein in spending to get their debts under control.
Under the agreement, investors holding €206 billion in Greek bonds would exchange them for new bonds worth 60 percent less.
The new bonds’ face value is half of the existing bonds. They would have a longer maturity and pay an average interest rate of slightly less than 4 percent. The existing bonds pay an average interest rate of 5 percent, according to the think tank Re-Define.
The deal would reduce Greece’s annual interest expense on the bonds from about €10 billion to about €4 billion. And when the bonds mature, instead of paying bondholders €206 billion, Greece will have to pay only €103 billion.
Without the deal, which would reduce Greece’s debt load by at least €120 billion, the bonds held by banks, insurance companies and hedge funds would likely become worthless. Many of these investors also hold debt from other countries that use the euro, which could also lose value in the event of a full-fledged Greek default. This is the scenario analysts fear most and why they hope investors will voluntarily accept a partial loss on their Greek bonds.
The agreement taking shape is a key step before Greece can get a second, €130 billion bailout from the EU and IMF.
Greece faces a €14.5 billion bond repayment on March 20, which it cannot afford without additional help.
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Why doesn’t Noonan push for a similar deal with existing Irish bank debt? If my neighbour gets his mortgage written down, am I entitled to lesser consideration? In the midst of a continuing and deepening crisis, the government talks in terms of winning, well the country could do with a few less victories.
Because they went out and protested en masse with the backing of their police. Our lads over here would rather spray mace at ya than back up their countrymen.
Because the survival of the currency isn’t rested on weather or not we will default. (which we won’t) as much as its hard to see it from a global perspective the loss on these bonds will have a global affect if a similar deal were drawn up with Ireland well the effects would be twice as bad.
And all were waiting for them to collapse never to be seen or heard again and look at Iceland..Ireland we are too bloody soft
We paid gamblers, wealthy investors at full price.
This is outrageous. Disbelief.
Well thank god we (here in Ireland) won’t be going around the place “with the name defaulter across our foreheads”. I mean, how embarassing would that be!
It’s much better to saddle every man, woman and child in the country with unsustainable debt that we never owed in the first place.
Thanks Enda & Co.
Better with defaulter across the head than “Billy Hunts”
Prey tell what the f*** are our bunch of muppets playing at.They should be screaming for a write down, did they forget who they work for.
They certainly have but what can we expect from Liars and traitors
The answer obviously is stop paying and take the consequences! That will certainly not be pleasant and we will be back in the dark for a while but that is going to happen anyway….isn’t it?
Kicking the can down the road again. Greece can’t afford to pay even this amount back. Ireland can’t either, the worst is yet to come!
None of the countries with billions of debt can afford to pay it back even with big write downs as Greece may get. Any one with an answer to this ?
ahh the old saying if you owe the bank 100euro its your problem, but if you owe the bank 1 million its their problem…
If you can’t repay it’s a default pure and simple but it let’s the Germans off the hook by it’s wording and leaves us firmly on the hook
Enda, show Europe your Balls and recognise the negotiating position your in and rescue us, as your mandate from the Irish electorate deserves.
I don’t think he has a pair
Our bailout funds are being channelled down to the rugby teams sponsored by the banks. Special needs kids are doing without services as their money is going to entertain the crowds at Landsdown road. Corporate boxes for AIB staff are a priority and team sponsorship is needed by Enda and Co. where are Labour on the money going to rugby clubs?
Waiting in line for their seats in the box of course, prawn sandwich socialists.
Jesus what is this goverment getting for sticking us with this debt while other countries get a better deal. And to think we are leaving this legacy to our kids. Is our finance minister even qualified to negotiate a better deal.
See Jambbie’s comment above.
Ireland could ask for a reduction in our debt and may even get it, but the price of that reduction is a price we are not willing to pay, 25% cut in all civil servants wages along with thousands of redundancies in the same area without the golden handshake pensions Irish are getting at the moment. Greeces will not have any say in their budgets for at least a decade probably more while we may be back in the markets next year. We want all the good stuff without any of the pain. No one wants tax increases in Ireland, most prefer cuts to balance the books but when asked what to cut no one wants anything cut. we all enjoyed the boom from wages rises to increases in welfare payments but no one wants to give up anything now and blames the government for trying to balance the books. what a fatalistic race of people we are.
I’ve had my wages cut by 20%, what makes the public service so fucking special?
Nonsense!! FG promised not one red cent to unsecured bond holders if elected, and yet we have paid in full every time.
I had 5 wage increases during the boom and I never went mad spending, buying a second house etc etc because the cost of living rose in line with my wage packet. My house is now valued at 1998 prices which I bought in 2005, and I have taken a 30% cut in wages. The cost of living has continued to increase. So to say that we don’t want the pain of cuts is nonsense. All I want is the government to carry out their promises and stop lying to us.
They are FF in disguise!
Me too Ciaro. Ive also suffered a 20% paycut. Plus my annual take-home pay is down approx €10,000 p.a because of an overtime ban. I didn’t see that coming when I bought a house in 2007. I’m also now doing the work of 3 people due to staff reductions and a recruitment ban. Its causing me and my colleagues great stress trying to cope and provide the same level of service to our customers, but we will carry on as it’s our duty to serve. Oh.. by the way I’ll be one of those public servants that’s not worth a fuck in your very well informed opinion.
@ Ciaro…I’ll tell you what makes me ‘so Fu**in special’…I’m the public servant that might have to cut you from the wreckage of a car, rescue you from a house fire, take you from a river, deliver your newborn. I’m the one that works nights, weekends, holidays etc. I’m the one that missed 2 of my daughters birthdays this year because I had to go to work and be a ‘public servant’. I’m the one that’s taken a 23% wage cut. Hopefully we never meet, but if someday we do, you’ll realise how special we are. We’re not looking for medals, just some respect.
Just goes to prove that if you face up to these Bondholders that you will get a large writedown and the Bondholders themselves know that this practise is par for the course, because they are gamblers!
If only our Government cared more for the people than pleasing Merkel and Serkoszy!
The Bondholders know the old saying is true, which is that ‘A bird in the hand is worth more than two in the bush’!!
Seems odd, that they want to get rid of one pile of debt, stretch the Greek economy further with more austerity, only to give the country a whole new pile of money they might not be able to pay back. Bonkers!! (Disclaimer: I’m not an economist.)
Maybe if we had a Taoiseach called Stavros rather than Inda we could get something similar.
Mind you, he’d have to avail himself of a spine transplant as well as a name change!
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