Short Term Trading Member Forum

[techcharter]

Greece Bonds SLIDE.

Yields on 1 yr Greek treasuries is now over 1100%. That means they are selling for 8.5 to 9.0% of face value.

I understand the Greek government is trying to force a "voluntary" exchange of debt into something with a 50 to 75 loss from the original face value of the debt. I understand that those "evil hedge funds" (sarcasm) have insurance policies against those bonds defaulting and see no reason to participate. What I have not read is why don't the bond insurers buy the bonds at these severely distressed levels ( with a present market value well below that of the new bonds) and exchange them for the new ones? Even if a default is declared, bond insurers would minimize their losses. It seems like everyone is playing financial chicken. Those who bought bond insurance are discounting counterparty risk. And those selling bond insurance are hoping for regulators to declare no default, despite an impairment on the value of the bonds.



http://www.bloomberg.com/quote/GGGB1YR:IND