Ratings Agencies Could Wreck Greek Rescue By Declaring It a Default!
- Greece is going to default. The Illuminist banksters are just having their final financial rape of the country before allowing the whole system to collapse. They are also positioning America for the same fate of bankruptcy and default. A Greek default will trigger the US$616B of CDS (insurance against default). This can lead to catastrophic consequences.
Ratings agencies could wreck Greek rescue by declaring it a default
by Heather Stewart and Richard Wachman , The Observer
• Markets braced for renewed turmoil amid doubts over bailout
• Europe’s insurers could be liable for €15bn of losses
Financial markets are braced for renewed turmoil this week amid growing doubts about the complex rescue plan for the debt-burdened Greek economy. Analysts are increasingly questioning the French and German governments’ plan for holders of Greek bonds to swap them for new loans as part of a fresh aid package.
The Greek prime minister, George Papandreou, met his side of the rescue bargain last week by winning MPs’ approval for radical new austerity measures, including €50bn of privatisations, public sector wage cuts and widespread civil service job losses. But eurozone ministers have so far failed to agree details of a new rescue, expected to be up to €110bn.
The debt-swap proposal, which French and German banks have agreed to, involves offering new 30-year loans in exchange for expiring bonds, to meet Germany’s demand that investors bear some of the costs of a new Greek bailout.
But analysts say it is likely that ratings agencies could still brand the plan a default. That would trigger chaos in world markets, as investors were forced to slash the value of their Greek debts – and could also lead to Portugal and Ireland, the other bailed-out eurozone states, having their debts downgraded.
Simon Derrick, chief currency strategist at BNY Mellon, said: “When you compare the French plan to what the ratings agencies have said, it looks as though they would make it a default.”
Standard & Poor’s said no final decision would be made on the scheme until the full details were published but pointed out a recent statement setting out the reasons a debt-swap might still constitute a default. “While an exchange offer for longer-dated bonds may appear to be ‘voluntary’, we may conclude that investors have been pressured into accepting because they fear more adverse consequences were they to decline the exchange offer,” S&P said.
Meanwhile, it emerged that Europe‘s insurers have invested up to €15bn in Greek government bonds, and could be drawn into any debt-swap plan.
Barclays Capital said the most heavily exposed European insurer was Italy’s Generali: it has €3bn invested in Greek bonds. Groupama and CNP Assurance of France are next, exposed to €2bn apiece. Ageas of Belgium, Munich Re and Germany’s Allianz are also big investors. Exposure for British insurers is said to be minimal.
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