Brussels, 25/07/2011 (Agence Europe) - The decision of the ratings agency Moody's to drop Greece's rating two notches to the second-lowest level, one above default (Ca), does not appear to have come as a surprise to the European Commission. “We were expecting this analysis” of the Greek debt situation in the light of the forthcoming trading in debt instruments, a spokesperson to the European institutions stated on Monday 25 July. The agreement of the eurozone summit on a second bailout for the country means that the private creditors will end up making losses, the agency Moody's stresses (EUROPE 10425). It explains that this move will increase the chances of the Greek debt stabilising, but its impact on the debt stock will remain limited, as this is expected to remain above 100% of national GDP for several years to come. At a level of €350 billion, Greek indebtedness is now more than 150% of GDP.
Shortly after the extraordinary summit, the ratings agency Fitch took the view that the Greek debt trade operations constitute a partial default (EUROPE 10426). Meeting at the International Institute of Finance (IIF), the financial lobby offered a contribution of the private sector to the costs of the second Greek bailout. Four options have been put forward, three of which are linked to trading debt instruments with long-maturity bonds. Over the period 2011-2014, they could potentially save the Greek State €37 billion, if 90% of the private sector participates. The summit stressed the “exceptional nature” of the agreement on the Greek debt: “what has happened with Greece will not happen with other countries”, the Commission spokesperson observed. The 17 take the view that Ireland and Portugal, the two other countries receiving international financial assistance, should not be subjected to a second aid plan involving the private sector. The markets may be tempted to test this statement. (M.B./transl.fl)