GO
Loading...

Greece Downgraded to 'Selective Default' by S&P

CNBC

Standard & Poor's on Wednesday cut Greece's sovereign long-term foreign currency credit rating to "selective default" from an already low "CCC" rating.

Last week Greece and its international lenders reached a deal to lower the country's debt burden, which included a debt buyback.

The decision to lower the sovereign rating follows the government's invitation to private sector bondholders to participate in the debt buyback "which under our criteria we view as a selective default," S&P said in an e-mailed statement.

"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," the statement said.

The outlook on the rating remains negative. Euro zone finance ministers and the International Monetary Fund reached agreement on Nov. 26 for steps to cut Greece's public debt and help the country regain access to international financial markets.

Greece said it would spend 10 billion euros to buy back bonds at a price range that topped market expectations. The move is seen as central to put the near-bankrupt country's debt back on a sustainable footing.

The buyback will be conducted through a modified Dutch auction in which investors declare at what level they are willing to sell their bonds before Athens sets a final price.

Contact Europe News

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    To learn more about how we use your information,
    please read our Privacy Policy.

Europe Video

  • IMF discusses role in Egypt

    Masood Ahmed, director of Middle East and Central Asia at the IMF, says that the IMF has two roles to play with Egypt, one of which is to provide dialogue and the other is to provide financial support.

  • IMF: Egypt has 'a long way to go'

    Masood Ahmed, director of Middle East and Central Asia at the IMF, says that Egypt has made a lot of improvements regarding energy subsidies and broader reforms, but still has "a long way to go."

  • Is Greece spiralling out of control?

    Peter Rosenstreich, chief FX analyst at Swissquote Bank, says the negotiations between creditors and Greece may not end well.