Why a 50% bond haircut=28%

Somewhere around 10 p.m. last night the EU announced a 50% "Voluntary" Bond haircut to private bondholders. When they offered the same at 22% thy needed 90% participation to make it fly, it fell short, how 50% will go over is mind-boggling. Furthermore, the ISDA (A conglomeration of banks, many of which wrote Credit Default Swaps- a type of insurance that pays in case your bonds don't) decided in the wee hour of the morning that this being a voluntary participation, does not trigger CDS. So all of the private bondholders who bought this protection are out in the cold, taking 50% losses plus the cost of CDS, that is unless a rating's agency declares this to be a default, which the EU is trying to avoid as it could be catastrophic.

The 50% write down on the value of the bonds that private holders including pension funds (Greek in particular-wait until the riot cam starts up one pensioners understand what happened), banks and individuals, is an immediate loss of 50%, however it is not a true 50% haircut, because some bond holders are protected. Venture a guess as to who?

-Greek debt is $350 BB Euros
-$70 BB in bonds have been bought by the Troika (NO HAIRCUT FOR THE TROIKA)
-Now we have $280 BB in debt, $75 BB of which is owned by the European Central Bank (NO HAIRCUT FOR THEM EITHER).
-Now there's about $200-$205 billion in Greek Debt ($35 BB held by Greek Pension Funds) This is the private debt that will be cut in half, so the cut is $100 BB or about 28%.

So the ECB and Troika members took care to craft a solution in which their debt holdings were untouched, but any bank, hedge fund, pension fund or individual will take an immediate 50% loss on the bonds held, There's more to it then that, but that's the basics of the Greek debt restructuring, one of the few things that seems concrete, however the fallout is far less assured.