S&P downgrades Greek credit rating to Selective Default

From The China Daily:

& Poor's late Monday cut Greece's "CC" long-term and "C" short-term sovereign credit ratings to "selective default"(SD), after the debt-laden country launched a bond swap plan to ease its debt burden last Friday.

The rating agency attributed its rating decision mainly to the Greek government's retroactive insertion of collective action clauses (CACs) in the debt swap deal, a legislation Greece has passed to force all private bondholders to participate in the swap.

"In our opinion, Greece's retroactive insertion of CACs materially changes the original terms of the affected debt and constitutes the launch of what we consider to be a distressed debt restructuring," S&P said in a statement on its website.

"Under our criteria, either condition is grounds for us to lower our sovereign credit rating on Greece to 'SD' and our ratings on the affected debt issues to 'Default'," the rating agency added.

S&P noted that Greece's decision to add CACs into the debt reduction program was equal to a debt issuer's "unilateral change of the original terms and conditions of an obligation", something it viewed as a "de facto restructuring and thus a default."

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