From Standard & Poor's Press Release regarding the French Proposal:
LONDON (Standard & Poor's) July 4, 2011:
This credit comment looks at the most prominent of the recent proposals, put forward by the Federation Bancaire Francaise (FBF) on June 24, 2011, in the context of our criteria for evaluating distressed debt exchanges and similar debt restructurings (see Related Research below). In brief, it is our view that each of the two financing options described in the FBF proposal would likely amount to a default under our criteria. (emphasis mine)
A bunch of mumbo jumbo follows. But Daniel Gros, director of the Center for European Policy Studies in Brussels, sums it up nicely in this NY Times quote: “Ratings agencies are saying, ‘We don’t think it’s voluntary; it’s just a way to hide a default’ — which it is.”
Dare I say it? . . . My fingers freeze on the keyboard as I type . . . S&P may have actually learned something from the last crisis. Surely it can’t last.
But the ECB apparently has not. According to the FT:
The European Central Bank will continue to accept Greek debt as collateral for loans unless all the major credit rating agencies it uses declare it to be in default, said a senior finance official. (emphasis mine)
According to the FT, Fitch has also indicated it is likely to call a rollover a default. Moody’s has yet to comment.
For Greece and the Euro, it’s back to the drawing board, looking for another way to keep kicking that can down the road. Only, according to Wolfgang Munchau, it’s no longer an ordinary can: now it is full of explosives.
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