Bondholder haircuts back on the agenda as Greece nears default

Despite previous announcements by European authorities that haircuts would not be imposed on investors in restructurings involving Eurozone sovereigns and banks before 2013, with each passing month that promise seems unlikely to be kept

In ruins: Greece’s debt burden looks unsustainable, say analysts

The issue of haircuts for investors holding bank and sovereign debt issued by troubled European countries keeps on resurfacing. No sooner had the European Commission (EC) begun its consultation on a possible crisis management framework for financial institutions at the beginning of January – a matter inextricably linked to sovereign debt given implicit government support for banks in most countries – than questions about how and when bondholders might be in line for haircuts returned to the fore