Given further falls in the prices of Greek government bonds (GGBs), it is little wonder some governments are reportedly seeking to renegotiate the terms of the debt exchange that was proposed for private sector creditors in July as part of Greece’s second bail-out package. The size of the “haircut” is 21% according to the International Institute of Finance (IIF). But the true size of the “haircut” depends on the discount rates used to value the new bonds’ cash flows. It is possible to argue that these should be both higher and lower than the IIF assumes. Either way, “haircut” is a misnomer, as the prices of the new bonds would still be a lot higher than those of existing GGBs.