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Greece Ratings Lowered To 'SD' (Selective Default)
View Analyst Contact Information
We are lowering our sovereign credit ratings on Greece to 'SD'.
This follows the Greek government's Dec. 3, 2012, invitation to
private
sector bondholders to participate in a series of debt buyback
auctions,
which under our criteria we view as a selective default.
When the buyback is consummated (which we understand is
scheduled to
occur on or about Dec. 17, 2012), we will likely consider the
selective
default to be cured and raise the sovereign credit rating on
Greece to
the 'CCC' category.
LONDON (Standard & Poor's) Dec. 5, 2012--Standard &
Poor's Ratings Services
today lowered its 'CCC' long-term and 'C' short-term
sovereign credit ratingson the Hellenic Republic (Greece) to
'SD' (selective
default).
We lowered our sovereign credit ratings on Greece to
'SD' following the Greek
government's Dec. 3, 2012, invitation to private sector
bondholders to
participate in a series of debt buyback auctions. In
our opinion, Greece's
invitation constitutes the launch of what we considerto be a
distressed debt
restructuring. Under our criteria (see "Rating
Implications Of Exchange Offers
And Similar Restructurings, Update," May 12, 2009), we
consider an exchange
offer as tantamount to default under the following two
conditions:
The offer, in our view, implies the investor will receive less
value
than the promise of the original securities; and
We believe the offer is distressed, rather than purely
opportunistic.
We consider that Greece's invitation satisfies these
conditions,
notwithstanding that investors may technically accept
the offer voluntarily,
and irrespective of whether an event of default as
defined by the bond
documentation occurs. In accordance with our criteria,
we have therefore
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lowered our sovereign credit rating on Greece to 'SD'
and our ratings on the
affected debt issues to 'D'.
Under our criteria, we define a restructuring to
include buybacks as an
alternative to a potential conventional default, in
which the investor or
counterparty stands to fare even worse, and which
motivates (at least
partially) the investor's acceptance of such an offer.
Standard & Poor's
treats such offers and buybacks analytically as de
facto restructuring and,
accordingly, as equivalent to a default on the part of
the issuer.
When Greece's buyback is consummated (which we
understand is scheduled to
occur on or about Dec. 17, 2012), we will likely
consider the selective
default to be cured and raise the sovereign credit
rating on Greece to the
'CCC' category, reflecting our forward-looking
assessment of Greece's
creditworthiness. In this context, any potential
upgrade to the 'CCC' category
rating would reflect, among other factors, our view of
the debt relief that is
being delivered through the buy back and its
contribution to putting the
sovereign's public finances on a sustainable footing.
RELATED CRITERIA AND RESEARCH Sovereign Government Rating
Methodology And Assumptions, June 30, 2011
Criteria For Determining Transfer And Convertibility
Assessments,May
18,
2009
Rating Implications Of Exchange Offers And Similar
Restructurings,
Update,
May 12, 2009
Criteria For Assigning 'CCC+', 'CCC', 'CCC-', And 'CC' Ratings,
Oct. 1,
2012
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Introduction Of Sovereign Recovery Ratings, June 14, 2007
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