Crazy, Mixed Up Confusion follows relief as Greek bond swap looms

Reuters writes that just days after European policymakers toasted a 109 billion euro ($156 billion) bailout aimed at hauling Greece back from the brink of insolvency, speculation some of its hapless bondholders might opt out of a crucial distressed debt exchange is gathering pace - to put it mildly

Greek creditors in banking, insurance and fund management are baying for more clarity on a proposed 'voluntary' scheme in which debt can be swapped for 15-year or 30-year bonds paying interest Greece can more easily afford, and slashing its debt.

Bank lobby group the Institute of International Finance reckons 90 percent of Greek government bondholders will take a 21 percent haircut on their holdings to take part in the offer. But some investors are debating the value of boycotting, particularly as heavily exposed lenders and insurers rush to endorse the plan in moves that may improve non-participating smaller bondholders' chances of being paid on time and in full.

"If you do a selective default -- allowing investors across the board to opt in but you only actually get a few holders carrying 40 or 50 percent of the total exposure to do it --that ... means you can afford to pay out more of the smaller holders," Colin Harte, a director of fixed income and currency at Baring Asset Management, told Reuters….

Read more at http://www.reuters.com/article/2011/07/25/businesspro-us-investors-greece-idUSTRE76O40O20110725