citi bank

citi bank Today the International Institute of Finance (IIF) is trying something similar for Greece. IIF members—global banks, insurance funds and investment managers—account for nearly all privately held Greek bonds. The IIF wants its members to extend the maturity of their Greek bonds maturing before 2020, while also reducing the overall amount owed by the Greek government. Mr Rhodes says the IIF should aim to exceed its 90% target for participation, if markets are to be convinced the plan can stabilise Greek debt. Is this likely?One key difference between the 1980s and today is the variety of bondholders. In the 1980s syndicates of banks financed governments directly though loans. Every bank had a strong interest in ensuring that governments avoided default.


Today’s Greek bondholders include hedge funds, mutual funds and even private individuals, many of whom will have purchased bonds on the secondary market at below-par prices. The diversity of bondholders, and their varying levels of tolerance of a default, makes coordination complicated.In the 1980s, the IMF generally made further lending to troubled governments conditional on private participation in debt-reduction schemes. That gave the likes of Mr Rhodes significant leverage. Banks knew that if they refused to restructure loans, governments would default without official-sector financing. The banks’ loans would never be repaid. The IIF does not have the same leverage today. European governments have already committed to providing more financing to Greece, and the IMF is set to follow suit. Greece may have the funds to service the bonds of banks who refuse to participate in the IIF plan.

citi bank