Greece’s long-term foreign currency debt was downgraded to C from Ca late yesterday, with Moody’s saying in a statement that investors who participate in the nation’s debt exchange will get about 70 percent less than the face value of their holdings. The deal constitutes “a distressed exchange, and hence a default,” the New York-based rating company said.
According to Moody's, "the announced proposal for private sector involvement, a precondition for the provision of further financial assistance from the euro area, would constitute a distressed exchange, and hence a default, on Greek government bonds."
The rating agency makes a distinction between a distressed exchange - where investors are losing money - and an outright default that is likely to happen when the exchange does not take place. "Both these conditions are met in this case," Moody's said.
When the Eurogroup's assessment has been finalized and debt exchanges have been completed, Moody's will re-assess the credit risk profile and ratings of any outstanding or new securities issued by the Greek government.
Moodys' concludes that "the risk of default even after the debt exchange has been completed remains high," and any upward movements in Greece's sovereign ratings after the debt exchange. (Reuters) http://www.athensnews.gr/portal/11/53765
"Successful trading is one long journey, not a destination" Peter Borish Former Head of Research for Paul Tudor Jones speaking on conversations with John F. Carter
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In an interview to leading french newspaper Liberation, a former French prime minister stated that increased austerity measures, such as those imposed on Greece by its lenders, could well see the country having to deal with an explosive social upheaval sooner rather than later.
“Nobody seems to be saying it, but the only way out for Greece, could well be a military coup”, Michel Rocard said, while also expressing his belief that no nation “can be democratically governed, when you cut back 25 percent of its earnings”.
He believes that the only solution for the debt ridden countries of southern Europe is for said debts to be completely wiped off the table.
Rocard, a member of the French Socialist Party and currently a member of the European Parliament, served as prime minister under Francois Mitterrand
Troika Believes Third Greek Bailout Worth Up To EUR50B Needed
BERLIN (Dow Jones)--The "troika" of the Greece's official creditors -- the European Commission, the International Monetary Fund and the European Central Bank -- believes that a third Greek bailout worth up to EUR50 billion might be needed to help the country raise funds between 2015 and 2020, German weekly magazine Der Spiegel reports Sunday.
Citing from the most recent draft report of the troika on the situation in Greece, the magazine said in a prereleased report of its Monday edition that it's not guaranteed Greece will be able to return to the market and raise funds already in 2015 and that's why the country might have an "external financial need of up to EUR50 billion."
The magazine also reported that this part of the report has been deleted from the troika report due to pressure from the German government.
The euro zone has just approved a second, EUR130 billion bailout package for Greece, which depends however on a debt restructuring with private sectors investors worth EUR107 billion. The offer for this debt restructuring expires Thursday.
German Chancellor Angela Merkel secured backing for the second bailout package in parliament, but an increasing number of lawmakers has expressed unhappiness about given more money. Comments by Finance Minister Wolfgang Schaeuble about a possible third Greek bailout package had caused uproar in Merkel's center-right coalition.
Germany Denies Pressuring Troika To Cut 3rd Greek Bailout From Report
BERLIN -- The German government Sunday said it hadn't pressured the "troika" of the Greece's official creditors--the European Commission, the International Monetary Fund and the European Central Bank--to delete a passage from its report on Greece, which said Athens may need a third bailout worth up to EUR50 billion.
The comments by finance ministry spokeswoman Marianne Kothe come after Der Spiegel weekly magazine had reported that Greece may need such a third rescue package to help the country raise funds between 2015 and 2020.
"We reject this Spiegel report," Kothe told Dow Jones Newswires. "An official or unofficial troika report doesn't exist. The troika is putting its report together independently."
A troika report will only be available once the debt restructuring with the private sector creditors has been completed, she said.