The new Greek bonds: more than meets the eye

Abstract

Since the 2012 Greek debt restructuring, much has been written about the crisis and the bond exchange that followed. However, no one has yet focused on the terms of the new Greek bonds the bondholders received in the exchange. These terms are unique in many ways, with new spins on old provisions and an innovative co-financing agreement, which links Greece’s obligation to the EFSF with its obligation to the bondholders. This paper takes a close look at these new bond terms and discusses the possible implications if these terms gained a wider acceptance, including a moving trend towards a sovereign debt default model that contains many elements of corporate bankruptcy.