“The Greek government was able to legally strong-arm most of its private bondholders into accepting the debt reduction deal it completed Friday. But next time — and experts predict there will almost certainly be a next time — Greece might have much less leverage”, the New York Times reports.
The article continues by saying that the final private creditor deal announced on Friday was agreed to by nearly 86 percent of bondholders; the number was expected to rise to 95 percent after Athens invoked a so-called collective action clause forcing others to join in. Without such a deal, Greece had strongly implied it might default altogether, with no one getting paid. The outcome has enabled Greece to reduce its debt load by just over 100 billion euros, or about $132 billion.
“Greece, in essence, has become a financial ward of Europe. And, because the I.M.F. will probably be reluctant to put in new bailout money in the coming years, the burden will increasingly fall to Europe, led by Germany, to finance Greece”, the paper emphasizes.
“As a rule, the I.M.F. does not accept haircuts and insists that its loans are always senior to all other obligations. European politicians, meantime, already under heavy criticism from voters for their countries’ increasing financial exposure to Greece, would have a difficult time explaining why they must take write-offs on some of their Greek debt because Athens still cannot balance its books”, the New York Times concludes.