{"id":521,"date":"2012-02-27T10:00:00","date_gmt":"2012-02-27T10:00:00","guid":{"rendered":"https:\/\/blog.alexanderhiggins.com\/?p=521"},"modified":"2024-04-24T13:14:33","modified_gmt":"2024-04-24T13:14:33","slug":"sp-officially-downgrades-greece-credit-rating-default-86881","status":"publish","type":"post","link":"https:\/\/blog.alexanderhiggins.com\/economy\/sp-officially-downgrades-greece-credit-rating-default-86881\/","title":{"rendered":"S&P officially downgrades Greece credit rating to \u2018selective default\u2019"},"content":{"rendered":"
\n
\n<\/p>\n
\n
\n<\/div>\n<\/div>\n
<\/div>\n

<\/p>\n


\n
\n
\n<\/p>\n

\n<\/div>\n
\n<\/div>\n

Standard & Poor\u2019s Ratings Services has downgraded Greece\u2019s sovereign credit rating to \u2018selective default\u2019 in response to the country\u2019s decision to involve the private sector in its comprehensive debt restructuring.<\/h3>\n

\u00a0<\/p>\n

Just hours ahead of the European market opens, S&P has become the first major ratings agency to declare Greece to be in the dreaded state of default.<\/p>\n

For months now politicians and bankers have been screwing over the public by jamming spending cuts and massive tax increases up the ass of the people of Greece to avoid a default which analysts have repeatedly warned could lead to widespread debt contagion throughout the world culminating it what has been labeled as nothing short of financial Armageddon.<\/p>\n

Despite widespread civil unrest in the form of protests and rioting, in Greece and throughout the entire Eurozone, over the austerity measures being forced into place to prevent sovereign debt default, Greece has entered the much dreaded state of default.<\/p>\n

\u00a0<\/p>\n

Forbes reports:<\/p>\n

\n

Greece In Selective Default, S&P Says<\/h2>\n
\"\"
\n<\/a><\/p>\n

Greek Bailout Deal A Farce To Benefit Banks At The Expense Of Greece<\/strong><\/a><\/h3>\n

\"AgustinoAgustino Fontevecchia<\/strong> Forbes Staff<\/span>
\n<\/a><\/p>\n<\/div>\n

Greece\u2019s credit rating was cut to selective default by Standard & Poor\u2019s after the bell on Monday, reflecting the implementation of collective action clauses (CACs) on its debt.\u00a0 Greece is in the middle of one of the largest sovereign debt restructurings ever and needs to secure significant private sector participation rate; CACs are designed to forcibly increase that rate.<\/p>\n

According to S&P, the Greek government retroactively inserted CACs into the documentation of certain series of its sovereign debt on February 23, two days after the Troika agreed on the terms for a second bailout package. \u00a0This retroactive implementation substantially changed the terms of the deal and\u00a0diminished\u00a0investors\u2019\u00a0bargaining power in the face of a restructuring, causing the downgrade, S&P said.<\/p>\n

Greece needs to fulfill certain conditions in order to receive the next tranche of money and avoid a disorderly default.\u00a0 Among those is the successful implementation of the so-called PSI (private sector involvement) deal, which is supposed to be voluntary.\u00a0 In practice, Greece is executing a bond restructuring that will see bondholders take an approximately 70% haircut on the net present value of their bonds while the average maturity will be significantly extended, reducing shorter-term funding requirements.<\/p>\n

For the PSI to succeed, the Troika (made up by the EU Commission, the ECB, and the IMF) is expecting Greece to secure the participation of 95% of private bondholders.\u00a0 Experts at Barclays<\/a> believe Greece could come short, and thus would use retroactive CACs that could require a 66% participation rate to force all bondholders to take the deal.<\/p>\n

\u201cIn our opinion, Greece\u2019s retroactive insertion of CACs materially changes the original terms of the affected debt and constitutes the launch of what we consider to be a distressed debt restructuring,\u201d read S&P\u2019s post-market release.<\/p>\n

Consummation of the debt exchange would result in a credit upgrade, S&P announced, and would take Greece\u2019s credit rating to CCC.\u00a0 \u201cIn this context, any potential upgrade to the \u2018CCC\u2019 category rating would inter alia reflect our view of Greece\u2019s uncertain economic growth prospects and still large government debt, even after the debt restructuring is concluded.\u201d<\/p>\n

[\u2026]<\/p>\n

Source:<\/strong> Forbes<\/strong><\/a><\/p>\n

\u00a0<\/p>\n<\/blockquote>\n

The Financial Times reports:<\/p>\n

\n

S&P puts Greece in selective default<\/h1>\n

\"\"<\/p>\n

The finance ministry said the downgrade was \u201cpre-announced and all its consequences have been anticipated, planned for and addressed\u201d by eurozone partners who are backing Greek efforts to avoid a disorderly default.<\/p>\n

A successful completion of the debt restructuring would clear the way for Athens to receive a second \u20ac130bn bail-out from international lenders, in return for implementing a fresh round of fiscal and structural reforms. Greece would remain in selective default until its debt swap offer closes on March 12 for a majority of bondholders, but \u201cupon completion of the PSI, the sovereign is expected to be re-rated upwards,\u201d the ministry said.<\/p>\n

S&P said the downgrade followed the retroactive insertion by Athens of a \u201ccollective action clause\u201d forcing all bondholders to accept the terms of the deal put forward by the government for bonds issued under Greek law.<\/p>\n

The Greek move \u201cconstitutes the launch of what we consider to be a distressed debt restructuring \u2026 we believe the retroactive insertion of CACs will diminish bondholders\u2019 bargaining power in an upcoming debt exchange,\u201d it said.<\/p>\n

[\u2026]<\/p>\n

Source: The Financial Times<\/strong><\/a><\/p>\n<\/blockquote>\n

Press TV reports:<\/p>\n

\n

Greece downgraded to selective default<\/h2>\n

Greece\u2019s move \u201cconstitutes the launch of what we consider to be a distressed debt restructuring,\u201d the US ratings agency said on Monday.<\/p>\n

Greece has become the first eurozone member in its 13-year history to be officially rated in default, down from its previous rating of \u2018CC\u2019.<\/p>\n

However, S&P said that once the debt swap is concluded, it will likely raise Greece\u2019s sovereign credit rating to the \u2018CCC\u2019 category.<\/p>\n

Greece has negotiated the biggest debt restructuring in history as it seeks to reduce national debt to 120 percent of gross domestic product by 2020, from 160 percent last year, and to meet the terms of a 130-billion-euro ($170 billion) international bailout.<\/p>\n

The private sector involvement entails a \u201cdebt swap\u201d which aims to slice 100 billion euros off more than 200 billion euros of privately held debt if all investors participate.<\/p>\n

The Greek government said the move was expected and would not hurt the banking industry.<\/p>\n

\u201cThis rating does not have any impact on the Greek banking system since any likely effect on liquidity has already been dealt with by the Bank of Greece,\u201d the Greek Finance Ministry said in a statement issued on Monday.<\/p>\n

Greece has the highest debt burden in proportion to the size of its economy in the 17-nation eurozone. Despite austerity measures and the bailout funds, the country has been in recession since 2009.<\/p>\n

Source:<\/strong>Press TV<\/p>\n<\/blockquote>\n


\n\n<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Standard & Poor\u2019s Ratings Services has downgraded Greece\u2019s sovereign credit rating to \u2018selective default\u2019 in response to the country\u2019s decision to involve the private sector in its comprehensive debt restructuring. \u00a0 Just hours ahead of the European market opens, S&P has become the first major ratings agency to declare Greece to be in the dreaded … Read more<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"_links":{"self":[{"href":"https:\/\/blog.alexanderhiggins.com\/wp-json\/wp\/v2\/posts\/521"}],"collection":[{"href":"https:\/\/blog.alexanderhiggins.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.alexanderhiggins.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.alexanderhiggins.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.alexanderhiggins.com\/wp-json\/wp\/v2\/comments?post=521"}],"version-history":[{"count":3,"href":"https:\/\/blog.alexanderhiggins.com\/wp-json\/wp\/v2\/posts\/521\/revisions"}],"predecessor-version":[{"id":1308,"href":"https:\/\/blog.alexanderhiggins.com\/wp-json\/wp\/v2\/posts\/521\/revisions\/1308"}],"wp:attachment":[{"href":"https:\/\/blog.alexanderhiggins.com\/wp-json\/wp\/v2\/media?parent=521"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.alexanderhiggins.com\/wp-json\/wp\/v2\/categories?post=521"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.alexanderhiggins.com\/wp-json\/wp\/v2\/tags?post=521"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}