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S&P Says Missed Payment to ECB Will not Lead to Ratings Downgrade‏

Standard & Poor's downgrades nine European countries Standard & Poor’s Ratings said on Monday that it would not move the ratings on Greece to ‘SD’ (selective default) should the government miss making payments on bonds maturing in July and August totaling 6.7 billion euros held by the European Central Bank (ECB). “That’s because our sovereign ratings pertain to a central government’s ability and willingness to service financial obligations to commercial (nonofficial) creditors and we consider the ECB to be an official creditor,” the ratings agency said.
S&P said in an announcement that the bonds in question are the result of a bond swap in early 2012 whereby the ECB exchanged an approximate €50 billion par amount of Greek government bonds it had purchased through the now-defunct Securities Market Program, for an equivalent par amount of new bonds. Some of these new bonds are falling due in July and August.
“To our knowledge, the ECB has retained the totality of the new Greek sovereign bonds it received in the 2012 swap. Therefore nonpayment of those bonds would not directly affect any commercial creditors. In such an event, Standard & Poor’s would therefore not move its sovereign rating on Greece to ‘SD’ (selective default). All other things being equal, however, such nonpayment would likely constitute a negative factor in our analysis and could lead to a lower, albeit nondefault, long-term sovereign rating than the current ‘CCC’ rating,” S&P said.
(source: ana-mpa)

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