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German tabloid Bild announced this morning that it would not participate in the Greek bond swap deal and accept writedowns of about 70 per cent on its holdings of Greek bonds, according to AFP.The move is largely a publicity stunt—the newspaper purchased two Greek bonds with a face value of €10,000 ($13,150) back in December for the discounted price of €4,815 euros.
Given that the value of its bond holdings would likely be slashed to about €3,000, however, the paper would still realise losses of more than 43 per cent.
The newspaper has been critical of efforts to bail out Greece, reportedly encouraging the lower house of the German parliament to reject the second round of aid measures yesterday.
However, even if the newspaper holds out from the bond swap, it could still face big losses if Greece decides to activate a collective action clause which would force all bondholders to accept the terms of the deal so long as 75 per cent of them agree to it voluntarily.
The AFP reports that the newspaper called the debt deal a “sham” based on “unrealistic” assumptions about the viability of Greece’s debt burden. “It alone will not help Greece back on its feet.” The paper has said that any profits it makes on these bonds will be donated to charity.
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