Greece Denies Rumors Of An Orderly Default With 50% Debt Haircut

The onslaught of half fiction, half lies from Greece continues after the Greek government was forced to deny the latest set of truth leaks, in this case that Greece is preparing for an orderly default, which it obviously is: there is no way the country can hope to implement the terms of the July 21 bail out now, especially with a dead silence on the terms of the bond exchange offer which means it has failed miserably. What it is certainly right about is that there is no truth to a debt haircut being just 50%: it will be far more, and the reality is it the haircut severity probably won't have much of an impact - most French and German banks have long since wound down their Greek exposure. The key question is how long before the other PIIGS follow suit. Another important question is whether the orderly default will come before the next IMF capital injections is provided to the country or after, and if it will be too late for an orderly bankruptcy then, and instead we get a disorderly one. From Reuters: "Greece denied on Friday newspaper reports that one option in the debt crisis would be an orderly default with a 50 percent haircut for bondholders. "Greece denies the reports," a senior government official told Reuters on condition of anonymity." And we all know what official denials mean...


Separately, the Finance Ministry said, in reaction to the reports, that the country was committed to implementing a second, 109 billion euro bailout agreed with its international lenders in July.


"All other discussions, rumours, comments, scenarios which are diverting our attention from this central target and Greece's political obligation ... do not help our common European task," Finance Minister Evangelos Venizelos said in a statement.


Two Greek newspapers said on Friday Venizelos outlined options to lawmakers, also including a disorderly default or the implementation of a second bailout package agreed between Greece, the European Union and the International Monetary Fund in July.

Looks like the FT will sure be busy in the countrintelligence arena today.