Greek Debt Swaps

Greek debt investors face huge losses if their bond holdings are required to be converted following a default. Payouts have not yet been triggered but plans for payout are on the horizon. The payout anxiety follows laws passed this week that would force write downs and conversions on the country's bond holdings in the effect of a default.

The author reports bondholder write downs of 53.5% for private sector investors. Additionally, bondholders would be required to swap their holdings with new bonds that have longer maturities and lower coupons. These write downs and conversions would provide payout aid for Greece but cause significant bondholder losses.

This is just one hurdle for the debt riddled country as it faces further discussions with its Eurozone counterparts. Eurozone leaders would like to create a plan that would alleviate further future defaults, provide aid to Greece for their payout requirements, and limit the losses to bondholders.

Wall Street Journal
Greek Debt Swaps Explained