Financial Times
February 4, 2011
Earlier, we considered whether the Republic of Greece is turning into a giant collateralised debt obligation.
This is because proposals to have the EFSF back a Greek government bond buyback appear to introduce some element of collateralisation to Greece’s debt. Although it’s all very complex – and we could be wrong.
What’s just as important is that Greece has backed its debt with other assets many times in its modern history. The concept isn’t totally new, and is worth considering now that sovereigns are beginning to post collateral in some debt deals.
It’s often assumed that sovereign collateral would be cash, or their own bonds. But not necessarily, as Greece also shows.
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