Fitch: larger bondholder haircut equals better Greek rating
I will be on BNN at 1240 ET and this is one of the subjects we’ll be discussing.
"The larger the haircut that bondholders accept, the better the outlook for the Greek sovereign from a credit quality perspective after the default," said Tony Stringer, a country debt analyst with Fitch.
"That is because the debt burden would be lifted and consequently the need for austerity would be less," he told Reuters.
If you were Greece and you heard this, what would you do?
(Hat tip Cardiff Garcia)
Source: Deeper bondholder loss could help Greek rating -Fitch – Reuters
Personally if I were in Greece’s position I would be holding out for a 100% write off or as close as possible. I would start investigations into the debts as onerous and push for criminalising any bank that wants payment in full.
If Europe wants to help Greece then they have to do something that changes it for the better rather than carrying on with the same old failed extend and pretend policies. Then Greece should apply for funds to rebuild its economy.
Nationalise the banks if necessary, and ban from accessing wholesale markets and issuing bonds to foreigners. With an isolated banking system it will be far more flexible to the local economy rather than chasing returns overseas. Banks will then have to find local creditworthy borrowers and charge accordingly. That will create a far more stable banking system for Greece. With the banks cut off from underpriced cheap Asian money they will need to attract Greeks to deposit with them. That will put interest rates at a more sustainable long term level.