Greek Bondholders Reduce Coupon Rate Demand

The chief negotiator for Greek bondholders said this morning that the group will accept an average coupon rate of 3.75% on the new bonds. Greece and the nation’s bondholders have been negotiating for weeks over exactly how much of a haircut the bondholders would voluntarily accept and what the coupon rate would be on new Greek bonds. The haircut has been set at about 50% of face value, or about 65% of net present value. The coupon rate has been more difficult to fix.

Greece, the European Union, and the IMF have argued for a very low 2% coupon on the new bonds, saying that unless future payments are reduced Greece won’t be any better off. Bondholders had been holding out for a coupon rate of 4%.