The History Of Greek Sovereign Debt Defaults | Investopedia

The Greek War of Independence began in 1821 and targeted the end of Ottoman authority, which had ruled most of that region for centuries. In 1824, a loan of 472,000 pounds was secured on the London Stock Exchange to continue this fight. This offering was oversubscribed and buyers were required to put down only 10% of the purchase price with a promise to pay the balance over time. An additional loan of 1.1 million pounds was floated in 1825.

The unfortunate fact about these two loans was that speculators and middlemen in London skimmed off much of the proceeds before Greece received any funds. Another issue was that the Greek War of Independence soon descended into civil war between rival factions, making it difficult to even figure out who should receive these funds.

No interest payments were ever made to the bondholders on these two loans, and the value of the paper eventually plummeted to a fraction of the par value. It wasn’t until 1878 that the Greek government settled on the loans, which by then with accrued interest had increased to over 10 million pounds.

via The History Of Greek Sovereign Debt Defaults | Investopedia

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