Markets prepare for possibility of default on Greece's debt

04/20/2010 | Financial Times (tiered subscription model)

Market participants are gearing up for the possibility that Greece will have to restructure its debt or even default. "Investors and analysts are now running the numbers to see what a haircut to Greek bonds would be," said Steven Major, global head of fixed-income research at HSBC. "One way to do this is to compare restructurings for emerging-market sovereigns. Based on the defaults over the last 12 years, the average long-term recovery rate is close to 70%. Ultra-long Greek bonds currently trade at a price below this."

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