S&P Downgrades Greece To Selective Default !

• The decision over whether a credit event (ie. default) has occurred to trigger CDS payments belongs to the ISDA not S&P or any rating agencies. All eyes are now on the 20 March 2012 date when Greece will have to make €$14.4B in payments. I believe a significant majority of PSI (private sector investors) will reject Greece’s ‘voluntary’ debt restructuring plan and aim for a hard default by Greece. This will definitely trigger the CDS (ie. insurance against default) payouts! Will this be the domino to collapse the entire Eurozone? We will know soon!
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  S&P downgrades Greece to selective default ! 
  by Reuters 
  ATHENS — Standard & Poor’s on Monday cut Greece’s long-term ratings to ‘selective default’, the second ratings agency to proceed with a widely expected downgrade after the country announced a bond swap plan to lighten its debt burden.
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  S&P said that once the debt exchange is concluded, it would likely raise Greece’s sovereign credit rating to the speculative ‘CCC’ category. “We lowered our sovereign credit ratings on Greece to ‘SD’ following the Greek government’s retroactive insertion of collective action clauses (CACs),” the U.S. ratings agency said.
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  It said Greece’s retroactive insertion of CACs — which enforce losses on investors who do not voluntarily sign up to the offer — changed the original terms of the affected debt and made the exchange a “distressed debt restructuring”.
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  Greece formally launched the bond swap on Friday. Under the deal, bondholders will take losses of 53.5 percent on the nominal value of their Greek holdings, with actual losses put at around 74 percent.
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  S&P said if enough bondholders did not accept the bond swap offer, Greece would face an imminent outright payment default. The agency defines its “selective default” status as one where the obligor has selectively defaulted on a specific issue or class of obligations but will continue to meet payment obligations on other issues or classes in a timely manner.
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  … for more click here!

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