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I don't think you understand NVP and debt. You seem to be suggesting Greek debt be discounted at something close to the risk free rate?

These discount rates are correct. The value of a promise of future cash payments from the Greek government is worth far less than one from the US or German governments for example.

If you actually believe that Greek debt should be discounted much less, I'll happily swap any amount of (say 10 year) Greek bonds with you if you give me the equivalent face value of 10 year US treasuries or German bunds. Since you think the NVP should be similar, you should be happy to take the deal.




If you can expect to be bailed outif the debtor defaults, then yes, you should use the risk free rate for discounting.


Nope - haircuts are calculated relative to current asset values.

For example, when discussing the haircut on a 100m greek bond that's currently trading for 60m, giving the holder 60m for it does not constitute a 40% haircut.




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