MidnightWatcher – Prophecy in Motion

By Louise Armitstead – “Authorities in Athens are ready to enforce the controversial collective action clauses, or CACs, to impose the restructuring deal on all bondholders as the number of voluntary agreements look set to fall short of the required amount.

Credit rating agencies have warned they will declare Athens to be in default if the CACs are triggered which would be a dramatic culmination to a three-year rollercoaster ride for Athens, the eurozone and global markets.

While the markets have been ready for a Greek default for months, the move could leave Greece and its banks barred from funding from the European Central Bank (ECB). On Monday, Standard & Poor’s declared Greece to be in a state of “selective default” which led to the ECB announcing it would no longer accept Greek government bonds as security for new loans.

The rating agency said its decision had been prompted by the threat of the CACs and the actual use of them is likely to tip Greece into actual default. The agency said it regarded the process as a ‘distressed debt restructuring’.

Raoul Ruparel of Open Europe, the London-based think-tank, said: ‘Greece is likely to struggle to reach the targets for a voluntary agreement so the credit rating agencies are almost certainly going to see this as a default.

‘What happens next is unknown territory.'” Read more.

Moody’s downgrades Greek debt to lowest level – “Moody’s Investors Service on Friday cut Greece’s sovereign debt rating to the lowest possible level after a debt restructuring deal that imposes hefty economic losses for private creditors. Moody’s lowered Greece’s local and foreign-currency bond ratings a notch to C from Ca, becoming the third credit rating agency to downgrade the country following the announcement of the swap deal to lighten its debt burden. Moody’s said it did not assign any future outlook to the rating due to the very high likelihood of a default by the Greek government on its bonds.” Read more.