Greece Debt deal will only reduce Debt as a percent of GDP by 12 percentage points

Kicking the debt can slightly down the road? From the WSJ:

The first attempt to share the burden on Greece's €360 billion ($500.62 billion) of debt was deeply flawed, doing virtually nothing to restore the country's debt sustainability. The second, a 50% reduction in the face value of private investors' bond holdings, goes a lot further. But even after this level of debt relief, Greece will remain heavily indebted.

The proposed July 21 deal involved a bond swap and debt buyback. In theory, bondholders were to take 21% haircuts, but in reality the deal only reduced Greek debt ratios upfront by 12 percentage points of gross domestic product. That was a drop in the ocean: The International Monetary Fund's most recent debt sustainability analysis saw debt peaking at 186% of GDP. Investors were to receive bonds backed by triple-A-rated collateral, effectively capping their losses. . . .