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S&P cuts Greece rating to selective default


14:05, December 06, 2012

NEW YORK, Dec. 5 (Xinhua) -- Standard & Poor's Ratings Services on Wednesday lowered its long-term sovereign credit rating on Greece from CCC to selective default, citing the Greek government's recent debt buyback auctions.

The rating agency said in a statement that the action came two days after the Greek government's invitation to private-sector bondholders to participate in a series of debt buyback auctions.

S&P said the invitation constitutes the launch of a distressed debt restructuring, which under the agency's criteria is an exchange offer tantamount to default.

The agency explained that the offer implied the investors will receive less value than the promise of the original securities and was distressed rather than purely opportunistic.

In S&P's definition, a restructuring to include buybacks is an alternative to a potential conventional default, so it treats such offers and buybacks as equivalent to a default on the part of the issuer.

However, Greece's rating may be raised back to the CCC category when its buyback is completed, which is scheduled to occur around Dec. 17, according to the agency.

The market was mute after the S&P decision as Greek bonds are already rated below investment grade by the three major rating agencies. Fitch Ratings has a triple-C rating on the debt, while Moody's Investors Service has a C rating.

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