Andrew Colquhoun, head of Asia-Pacific sovereign ratings for Fitch, told a conference in Singapore early on Tuesday that the Fitch Ratings Agency would regard a debt exchange or voluntary debt rollover of Greek debt as "a default event and would lead to the assignment of a default rating to Greece."
Standard & Poor have reaffirmed that a voluntary debt restructuring for Greece would probably be deemed a default.
Only Moody’s Investors Service has held back, in so far as they give a Caa1 rating to Greece’s sovereign debt.
All the above is interesting as the technical ways of avoiding default are investigated and explored. I note that the International Swaps and Derivatives Association has said that a debt exchange that extended maturities, rather than writing off debt, would not be considered a default because that would not trigger payment on contracts to insure against default (Credit Default Swaps).
In my view Greece will not avoid default and at that point the Euro currency experiment will fail; maybe the EU with it.
Now what I am about to say may surprise people. I am no fan of the Euro or the EU; I would have voted against the European Constitution/Lisbon Treaty had I been given the chance in the promised referendum, indeed I would have voted to leave the EU if I had been asked. However the collapse of the Euro and maybe the EU will cause misery to many millions of people and Pyrrhic victories are usually not worth it.
Standard & Poor have reaffirmed that a voluntary debt restructuring for Greece would probably be deemed a default.
Only Moody’s Investors Service has held back, in so far as they give a Caa1 rating to Greece’s sovereign debt.
All the above is interesting as the technical ways of avoiding default are investigated and explored. I note that the International Swaps and Derivatives Association has said that a debt exchange that extended maturities, rather than writing off debt, would not be considered a default because that would not trigger payment on contracts to insure against default (Credit Default Swaps).
In my view Greece will not avoid default and at that point the Euro currency experiment will fail; maybe the EU with it.
Now what I am about to say may surprise people. I am no fan of the Euro or the EU; I would have voted against the European Constitution/Lisbon Treaty had I been given the chance in the promised referendum, indeed I would have voted to leave the EU if I had been asked. However the collapse of the Euro and maybe the EU will cause misery to many millions of people and Pyrrhic victories are usually not worth it.
1 comment:
The question, surely, is whether the continuation of the Euro and the EU will cause even more misery than their collapse ? No way of knowing, but I am happy to take the risk !
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