Excess baggage



On July 2, the management of German reinsurance group Gerling-Konzern Globale Rückversicherungs (GKG) announced its intention to defer the coupon payment of its sole €220 million, 20-year bond, issued in August 2001. While the mainstream financial press has largely overlooked the event, the news has stunned bondholders. Not since the collapse of Barings Bank in 1995 have bondholders lost this much money on a European financial name.

The move marks the first time a European borrower has exercised

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