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Athens News Agency: News in English, 12-02-28

Athens News Agency: News in English Directory - Previous Article - Next Article

From: The Athens News Agency at <http://www.ana.gr/>

CONTENTS

  • [01] S&P downgrades Greece to 'selective default', with view to upgrade after PSI
  • [02] ECB temporarily suspends use of Greek debt bonds as collateral until PSI

  • [01] S&P downgrades Greece to 'selective default', with view to upgrade after PSI

    AMNA / The Standard & Poor's rating agency downgraded Greece's credit rating to SD (Selective Default) from CC late Monday, with a prospect of upgrading to CCC after completion of the PSI bond swap process in mid-March.

    In an announcement, Standard & Poor’s Ratings Service said that "it has lowered its 'CC' long-term and 'C' short-term sovereign credit ratings on the Hellenic Republic (Greece) to 'SD' (selective default)", while "our recovery rating of '4' on Greece's foreign-currency issue ratings is unchanged" and "our country transfer and convertibility (T&C) assessment for Greece, as for all other eurozone members, remains 'AAA'." www.amna.gr

    Explaining the decision, S&P said: "We lowered our sovereign credit ratings on Greece to 'SD' following the Greek government's retroactive insertion of collective action clauses (CACs) in the documentation of certain series of its sovereign debt on Feb. 23, 2012. The effect of a CAC is to bind all bondholders of a particular series to amended bond payment terms in the event that a predefined quorum of creditors has agreed to do so. In our opinion, Greece's retroactive insertion of CACs materially changes the original terms of the affected debt and constitutes the launch of what we consider to be a distressed debt restructuring. Under our criteria, either condition is grounds for us to lower our sovereign credit rating on Greece to 'SD' and our ratings on the affected debt issues to 'D'." amna

    [02] ECB temporarily suspends use of Greek debt bonds as collateral until PSI

    AMNA / The European Central Bank on Tuesday temporarily suspended the use of Greece bonds as collateral in its Eurosystem monetary policy operations, until completion of the PSI bond swap in mid-March, following a downgrade of the Greek sovereign debt to 'selective default' by the ratings agency Standard & Poor's, with a view to upgrading to CCC after completion of the PSI process.

    The ECB announcement said on Tuesday:

    "The Governing Council of the European Central Bank (ECB) has decided to temporarily suspend the eligibility of marketable debt instruments issued or fully guaranteed by the Hellenic Republic for use as collateral in Eurosystem monetary policy operations. This decision takes into account the rating of the Hellenic Republic as a result of the launch of the private sector involvement offer. www.amna.gr

    At the same time, the Governing Council decided that the liquidity needs of affected Eurosystem counterparties can be satisfied by the relevant national central banks, in line with relevant Eurosystem arrangements (emergency liquidity assistance).

    Marketable debt instruments issued or fully guaranteed by the Hellenic Republic will become in principle eligible upon activation of the collateral enhancement scheme agreed by the Heads of State or Government of the euro area on 21 July 2011, and confirmed on 26 October 2011, together with a number of other measures aimed at assisting Greece in its adjustment programme. This is expected to take place by mid-March 2012." amna


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