“S&P’s downgrade of Greece to CCC has them one notch below Moody’s but at this level of a rating, just above default, there isn’t much of a difference. The heightened risk of default is the basis for the downgrade as S&P said “we believe some official creditors will see restructuring of commercial debt as a necessary condition to such additional funding. We believe that private sector burden sharing could take the form of a debt exchange offer or an extension of debt maturities. In our view, any such transactions would likely be on terms less favorable than the debt being refinanced, which we, in turn, would view as a de facto default…” Bottom line, S&P isn’t saying anything new but it does cloud the position of the ECB who is in favor of no default whatsoever, whether obvious or not. They are relying on Greece’s privatization efforts and budget austerity to avoid default, which unfortunately for them is wishful thinking and an attempt to salvage their own balance sheet.”
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