Debt restructuring

ilovesleep

What is debt restructuring and how can it help ireland?

later12

It's a process whereby a borrower may negotiate a lower principal repayment on a debt (a 'haircut'), or an extension on the duration of repayment of the debt, or both an extension for repayment and a reduction of the outstanding debt.

It is different to default, which typically involves a unilateral decision to adjust, postpone or cease repayment in the event of a negotiation on restructuring breaking down.
Of course there are also some people who take default to mean an outright refusal to repay a debt, which is pretty much the best way that exists to destroy one's creditworthy reputation.

Referring to restructuring as a partial default is not strictly correct either, (unless it is a unilateral decision), yet unfortunately many commentators often describe it as such. Ideally a restructuring arrangement comes about by negotiating repayment terms with one's creditor, on terms to which both can happily agree.

Restructuring Irish debt would help the state in that it could repay its debts over longer terms and the principal of those loans could also be reduced. In my opinion, the ideal situation would be a European mediated restructuring whereby the Eurozone would buy up senior debentures from the irish banks from the secondary markets, where it is available at cheaper rates. They would then swap thse bonds with the Irish Government for bonds of a longer duration, and could ideally pass on the principal reduction to the Irish state, or even expand on it.

Unlikely, for now; but potentially very helpful. There is an EU summit in March when that may be given greater attention.