There’s talk of a Greek haircut (devaluing bonds). This is a default and would trigger a credit event. The number I’m hearing is 21% but there’s talk that developing nations are pushing for something larger. Others are saying as much as 40%.
The number doesn’t matter as much as the rumor. If it sounds like this is what they’re discussing at the G20, then no one will want to be exposed into the weekend.
But with Papandreou’s recent comments, I’m skeptical about this rumor. Expect it to spread though and hit risk appetite for 20-30 minutes.
Update: the latest is that Greece is planning a debt buyback program that’s open to all investors. I’m not sure these reports are related.
Update 2: The talk is that it is the EU that will buy the Greek bonds in the swap. That sounds like a reasonably good idea.