July 4, 2011 1:49 pm
S&P deals blow to Greek bail-out plan
By Richard Milne in London, Peggy Hollinger in Paris and Gerrit Wiesmann in Berlin
FT.com
French and German banks’ plan to roll over their holdings of Greek debt suffered a blow on Monday as Standard & Poor’s, the credit rating agency, said the move would amount to a default.
The proposal to provide up to €30bn ($43.6bn) in financing for Greece had been made conditional on rating agencies not downgrading Greece’s debt. But S&P said on Monday that any rollover would be a “distressed” transaction and thus lead to Greece’s rating being lowered to selective default.
There was no immediate reaction from the Greek finance ministry to the S&P statement. French officials said they were not unduly concerned by the move, which had been anticipated. “It should have no immediate impact on the CDS [credit default swap] markets,” one said.
The German government also had no official comment. But civil servants said they had factored in the eventuality of a so-called ratings event from the beginning.
Full story: http://www.ft.com/cms/s/0/e69610e4-a60a-11e0-8eef-00144feabdc0.html#axzz1R9wNgfbv
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