The agency reported that the program supported by the European Union and the debt swap proposal means that private creditors have "substantial economic loss." European officials say they are prepared for the default
Greek.
It has nothing to do.
The agency Moody's yesterday downgraded bond rating category Greeks to "junk", leaving barely a step above the "default". "The combination of the announced program of support of the European Union and the debt swap proposals made by major financial institutions means that private creditors have substantial economic losses in its holdings of government debt," said the agency through a statement. On Friday, Fitch had proceeded in a similar way to advance that will lower the note also Greek. This position contradicts the speeches of the main references of the EU, who last week said the rescue package is not a Greek debt default because the restructuring will be voluntary. European countries, who tarried in the G20 to reform the international financial system to limit the power of rating agencies as requested by Argentina, now suffer.
"We believe that Greece is in virtual default," said a spokesman for the agency said the news agency AFP. "But until we can estimate the amount of losses by private creditors, we can not officially declare the country bankrupt," he said. Moody's indicates that new bonds will receive the category of "default" once the exchange between the old and new Greek bonds.
The agency explained that "the magnitude of the losses will be determined by the difference between the value of traded debt and the debt value received in the marketplace." In this context, he recalled that the Institute of International Finance (IIF, which brings together the major financial institutions participating in the bailout package to Greece) is considered probable that the losses of investors in excess of 20 percent. For Moody's, the probability of an exchange of Greek bonds very negative to the point that you get to the moratorium is "virtually one hundred percent."
For this agency, the new rescue plan undoubtedly has advantages for the country-and low costs associated with debt and reduced dependence on financial markets, "but the impact on reducing your debt is limited," he alleged. In the longer term, Moody's expects that Greece, with its policy of austerity and external rescue, is able to stabilize and reduce debt. It also recognizes that the measures announced succeed in containing the risk of contagion of insolvency other countries in the euro zone. But in the medium term, Greece still faces serious challenges because their debt solvency "exceed 100 percent of GDP for several years," the agency warned.
The Greek finance minister, Evangelos Venizelos, met yesterday in Washington with the managing director of the International Monetary Fund, Christine Lagarde, and the U.S. Treasury secretary, Timothy Geithner, discussing his country's efforts to revive the economy. The Treasury said in a statement that Geithner had "welcomed the progress made by Greece to strengthen public finances and stressed the need that the program be continued and implemented in its entirety."
To reassure, and despite his opposition to the default of Greece, the European Central Bank president, Jean-Claude Trichet said last week that "everything was done to deal with any eventuality." One way of saying that the Greek default under control.
The new plan to help Greece, decided last Thursday at a summit of the eurozone and a total of close to 160,000 million, provides for private sector participation, primarily banks. These entities agreed not to charge the full amount of loans granted to Greece and help nearly 50,000 million euros in the rescue of the country. This participation will be through an exchange of bonds maturing through 2020 by other thirty years.
The agreement will allow Greece to become less dependent on financial markets and limit the costs associated with its debt, estimated at a total of over 350,000 million euros.
Greek.
It has nothing to do.
The agency Moody's yesterday downgraded bond rating category Greeks to "junk", leaving barely a step above the "default". "The combination of the announced program of support of the European Union and the debt swap proposals made by major financial institutions means that private creditors have substantial economic losses in its holdings of government debt," said the agency through a statement. On Friday, Fitch had proceeded in a similar way to advance that will lower the note also Greek. This position contradicts the speeches of the main references of the EU, who last week said the rescue package is not a Greek debt default because the restructuring will be voluntary. European countries, who tarried in the G20 to reform the international financial system to limit the power of rating agencies as requested by Argentina, now suffer.
"We believe that Greece is in virtual default," said a spokesman for the agency said the news agency AFP. "But until we can estimate the amount of losses by private creditors, we can not officially declare the country bankrupt," he said. Moody's indicates that new bonds will receive the category of "default" once the exchange between the old and new Greek bonds.
The agency explained that "the magnitude of the losses will be determined by the difference between the value of traded debt and the debt value received in the marketplace." In this context, he recalled that the Institute of International Finance (IIF, which brings together the major financial institutions participating in the bailout package to Greece) is considered probable that the losses of investors in excess of 20 percent. For Moody's, the probability of an exchange of Greek bonds very negative to the point that you get to the moratorium is "virtually one hundred percent."
For this agency, the new rescue plan undoubtedly has advantages for the country-and low costs associated with debt and reduced dependence on financial markets, "but the impact on reducing your debt is limited," he alleged. In the longer term, Moody's expects that Greece, with its policy of austerity and external rescue, is able to stabilize and reduce debt. It also recognizes that the measures announced succeed in containing the risk of contagion of insolvency other countries in the euro zone. But in the medium term, Greece still faces serious challenges because their debt solvency "exceed 100 percent of GDP for several years," the agency warned.
The Greek finance minister, Evangelos Venizelos, met yesterday in Washington with the managing director of the International Monetary Fund, Christine Lagarde, and the U.S. Treasury secretary, Timothy Geithner, discussing his country's efforts to revive the economy. The Treasury said in a statement that Geithner had "welcomed the progress made by Greece to strengthen public finances and stressed the need that the program be continued and implemented in its entirety."
To reassure, and despite his opposition to the default of Greece, the European Central Bank president, Jean-Claude Trichet said last week that "everything was done to deal with any eventuality." One way of saying that the Greek default under control.
The new plan to help Greece, decided last Thursday at a summit of the eurozone and a total of close to 160,000 million, provides for private sector participation, primarily banks. These entities agreed not to charge the full amount of loans granted to Greece and help nearly 50,000 million euros in the rescue of the country. This participation will be through an exchange of bonds maturing through 2020 by other thirty years.
The agreement will allow Greece to become less dependent on financial markets and limit the costs associated with its debt, estimated at a total of over 350,000 million euros.