Greek Debt Swap Could Lose Bondholders More than 70%

Holders of Greek bonds could be facing a loss of more than 70% of the net present value on their holdings according to the country’s finance minister. The loss would include a writedown of debt and an interest rate on the new bonds of less than 4%.

A report on Bloomberg News does not offer additional details, although it is by now widely believed that Greece will have to agree to more spending cuts and labor reforms in order to make the deal, which would release a €130 billion bailout package to the country in time to meet its March debt repayment schedule.

If the deal gets done, and is subsequently rejected by the Greek parliament, the country would almost certainly have to endure a messy default. Demonstrations by union workers are already on tap for next month, and they will be even noisier than usual if the austerity measures cut as deeply as anticipated.