In financial parlance, when an investor or bondholder gets a "haircut," it means his holdings have been devalued by a certain percentage in the interest of stabilizing a company. It is usually a number handed down by a bankruptcy judge or an agreement entered into with the company seeking to lowers its debts.

In the case of private investors who hold sovereign debt bonds from Greece, it looks like it's going to be a flattop:

Reuters:

Private holders of Greek debt may need to accept losses of up to 60 percent on their investments if Greece's debt mountain is to be made more sustainable in the long-term, a downbeat analysis by the EU and IMF showed on Friday.

Euro zone finance ministers threw Greece a lifeline on Friday by agreeing to approve an 8 billion euro loan tranche that Athens needs next month to pay its bills.

But the European Commission, European Central Bank and International Monetary Fund -- the so-called troika -- issued a gloomy report on Greece's ability to pay its debts.

Among three scenarios it examined, the only one that would reduce Greece's debt pile to 110 percent of GDP -- a level still regarded as high -- was one in which private bond holders agreed to a 60 percent haircut.

"To reduce debt below 110 percent of GDP by 2020 would require a face value reduction of at least 60 percent and/or more concessional official sector financing terms," the debt sustainability report, obtained by Reuters, showed.

A footnote explained that the ECB disagreed with including the scenarios in the report, concerned that private sector lenders would refuse to agree to such a steep writedown voluntarily, effectively leading to a fullscale Greek default.

The choice facing bondholders will be take the 40 cents on the dollar offered or probably get nothing when Greece defaults. There will no doubt be some outcry against such a plan, but do the bondholders really have a choice?

Stay tuned.