S&P downgraded Greek debt to “selective default”

Rating agency Standard & Poor’s dropped Greece’s rating from the previous CC level to the level classifying Greek debt as in “selective default”. The statement came as a result of the formal offer document, presented by the Greek government last week, for its agreement to exchange bonds for new securities, with investors taking 53.5 percent reduction in the value of their investments.

Banks and other financial firms are also being asked by Greece’s government to take a 53.5 percent loss on their Greek sovereign bonds.

The plan agreed by the Greek parliament last week should reduce the country’s debt by 107 billion euros.

S&P said that when the debt exchange was complete, it would assess Greece again and possibly raise its rating.

The downgrade follows a reduction last week by Fitch Ratings to C, while Moody’s Investors Service has said it will cut the nation to its lowest rating.

The Greek government said S&P’s move had been expected and it would not hurt the banking industry.

Source: BBC

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