Fitch Ratings: Greece Downgraded to ‘Restricted Default’
March 9th, 2012Via: Fitch Ratings:
Fitch Ratings has downgraded Greece’s Long-term foreign and local currency Issuer Default Ratings (IDRs) to ‘RD’ (‘Restricted Default’) from ‘C’ following today’s confirmation from the Greek government and eurozone officials that the exchange of Greek government bonds will proceed.
The downgrade to ‘RD’ reflects Fitch’s previous commentary that the exchange would constitute a sovereign default event under the agency’s distressed debt exchange (DDE) rating criteria, and follows the downgrade of Greece to ‘C’ from ‘CCC’ on 22 February. Greece’s Short-term foreign currency IDR remains unchanged at ‘C’. The euro area Country Ceiling, which is applicable to all euro area member states, also remains unchanged at ‘AAA.’
Under the exchange, each EUR100 face value amount of Greek government bonds will be exchanged for new bonds with a face value of EUR31.5 and EUR15 of EFSF (‘AAA’) notes. Bondholders will also receive a notional EUR31.5 of Greek GDP-linked securities. The implied loss relative to the original terms and conditions of the bonds implied by the exchange is estimated by market participants to be approximately 74%.
