bond outcome

Naive question, but if I buy a Greek 2yr bond today (~20%), and Greece defaults before the bond matures, what happens to my investment if I intend to hold the bond to maturity? Does it depend on the details of the debt restructuring plan?

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Permalink Reply by Ad Orientem on April 19, 2011 at 10:29pm

Yes.

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Permalink Reply by Ad Orientem on April 19, 2011 at 10:37pm

Oooops. I hit the reply button too quickly. As a side note, Greece is bankrupt. Very few people seem to not realize that. Some form of default is inevitable unless the ECB/IMF want run the risk of creating a massive inflation with their constant interventions. One thing is becoming clear. Greece has reached the practical limits of austerity. There is only so much cutting you can do before you run the risk of destablizing the country.

I don't know what you paid for your Greek Bonds but unless you got them during one of the various fire-sales and or they constitute a relatively small part of your portfolio I would consider cutting your losses. As of right now I would buy Confederate bonds before Greek. The odds of getting my money back are better.

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Permalink Reply by Ray Senko on April 19, 2011 at 11:46pm

Thanks, I've been wondering for a while about how a country goes through the default procedure relative to a company. FYI, I haven't (nor am I considering) buying any Greek debt, just curious what happens to those who did.