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Because Germany and other northern European countries were not prepared to give a handout, there were two options: force the government's own bondholders to take a loss, or hit bank creditors.
But with Ford, which is arguably in better financial shape offering less to its own bondholders, that looks unlikely.
The process allows them to collect interest from the federal government, and use that yield to pay their own bondholders.
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A health care trust fund for union retirees owns 19%, and bondholders own the rest.
Today, much of that debt is owned by bondholders around the world, and cozy, old-boy powwows won't cut it anymore.
But the company will be owned by bondholders, including the hedge funds that swooped in last year — when it was obvious Swift Energy was in trouble — and bought, for dimes on the dollar, the bonds that were certain to default.
Former bondholders own 16percentt, and creditor Deutsche Bank owns 24percentt.
The union could end up owning about 20% of a restructured GM, with taxpayers owning as much as 70% and bondholders owning the remaining 10%.
Last summer, Cyprus's banks took steep losses on their large holdings of Greek bonds when that nation was given its own bailout and bondholders had to take losses.
Cyprus's banks took steep losses on their large holdings of Greek bonds last June when that nation was given its own bailout and bondholders were forced to take losses.
If default occurs, then the bondholders own the firm.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com