June 17, 2011
As euro-zone officials get closer to forging some kind of agreement on a Greek debt package and restructuring, all eyes will be on the credit-ratings firms to see whether they slap a default rating on the obligations of the Hellenic Republic.
The latest plan, mooted by France and Germany, would include bondholders “voluntarily” agreeing to roll over their existing debt, instead of forcing Greece to pay it back. The aim, in part, is to help Greece defer its obligations without getting a “default” rating.
Officials in the euro-zone are keen to avoid such a rating for a number of reasons.
For one thing, the European Central Bank has threatened to reject Greek government bonds as collateral for ECB loans in the event of default, an action that could cripple a Greek banking system that depends on those loans for funding.
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