European leaders had hoped to complete the deal by the year’s end through a bond swap, where debt holders exchange their holdings for new bonds worth less. Greece is facing a bond repayment of €14.4bn on March 20 and officials are pushing to get a deal done well in advance so that Athens did not have to pay the full amount.And of course the
But the deal’s details were left open and bondholder representatives said the two sides remained far apart on financial specifics. Despite the agreed 50 per cent nominal haircut, the long-term value of the new bonds can change significantly by adjusting their interest rates.
Vega complained about the refusal of the European Central Bank to take any losses on its holdings or for Greek banks – in effect wards of the state – to accept write downs.So both sides are still far apart, the Greek people are still not happy with austerity, the Germans are not thrilled about footing the bill. In short, no one is happy but the bureaucrats and the bankers (who don't want to take any losses). Now I am a firm believer in capitalism, but if the bonds are bad, then everybody should be in the same boat. There shouldn't be 2 classes of bondholders: the banks, and everyone else. That isn't capitalism. That is cronyism.