Wall Street Journal
May 24, 2011
Eurocrats insist that Greece will not default on its sovereign debt obligations, but the markets think otherwise.
As politicians and policy makers haggle, analysts are trying to game-out what would happen in the event Greece defaulted. Moody’s Investors Service in a note this morning tried to put a little meat on the default scenario, and it made for some pretty dark reading.
Let’s break it down, with a little Translation Time.
Moody’s: Moody’s Investors Service has explored possible Greek default scenarios in order to assess the impact on the country’s sovereign rating, the consequences for Greek banks and the possible paths of credit contagion to other European sovereigns, which are discussed in a Special Comment published today.
TT: Leading with “contagion” surely gets attention. If Greek defaults, it won’t be an Athens-only affair. Seatbelts, tighten ‘em.
Moody’s: Moody’s did not comment on the likelihood or the desirability of a debt restructuring, but focused more narrowly on some of the credit implications of different default scenarios.
TT: Moody’s has no dog in this fight. Just a passive observer. Right.
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