July 22, 2011
Fitch has become the first ratings agency to confirm that it will put Greece into default as part of the €109bn rescue deal agreed on Thursday night.
Although Fitch welcomed the agreement that was unveiled in Brussels, it has also decided to assign Greece a "restricted default" rating. The decision is based on the fact that private sector investors will contribute up to €50bn by rolling debt over or writing some off altogether.
"Fitch considers the nature of private sector involvement in a new financial programme of support for Greece to constitute a restricted default event," said David Riley, head of sovereign ratings at Fitch. "However, the reduction in interest rates and extension of maturities potentially offers Greece a window of opportunity to regain solvency, despite the formidable challenges that it faces."
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