Reuters
July 22, 2011
The euro zone has built safeguards into its second financing package for Greece to cope with the risk that Greek debt will be temporarily downgraded to selective default, euro zone sources said.
Euro zone leaders agreed on Thursday to provide an extra 109 billion euros ($156 billion) in official financing to save Greece from bankruptcy. Private sector bondholders also agreed to swap some of their existing bonds for new debt issued on easier terms for Greece.
Fitch Ratings said on Friday it would declare Greece in restricted default on its debt during such a swap but would probably assign new ratings of a low speculative grade once a bond exchange is completed.
"The package has money to deal with the possibility that rating agencies may downgrade, for a short period of time, Greece to selective default. We are ready for that," one of the euro zone sources, involved in the negotiations process, said.
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