Bloomberg News

Greek ‘Haircut’ Will Likely Be in 40%-50% Range, Goldman Says

October 21, 2011

Oct. 21 (Bloomberg) -- Greek government bond losses for investors in the debt will probably be no more than 50 percent, according to Goldman Sachs Group Inc.

“There will be a deeper haircut on government debt within the existing PSI framework,” Goldman Sachs analysts wrote in a report today. “To meet the requirement that such a debt exchange be voluntary, and therefore avoid a credit event that would trigger credit default swap contracts, the haircut will likely be limited to the 40-50 percent range, rather than the 60 percent plus originally demanded by Germany.

‘‘The resources of the EFSF will be ‘leveraged’ by offering first-loss insurance on new government debt issues by Italy, Spain and possibly other countries. We expect the insurance to cover the first 20-30 percent of principal. After accounting for existing EFSF commitments, this scheme could guarantee up to 1.25 trillion euros of new issuance,’’ the analysts said.

To contact the reporter on this story: Emma Charlton in London at

To contact the editor responsible for this story: Daniel Tilles at

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