Greece risks be assessed in the on its debt obligations, if banks are forced to bear part of the pain, said standard & poor's Monday, suggesting that current proposals for the rescue of the euro zone may be reconsidered most vulnerable Member States.
In particular said S. & p a by the French Government and proposed banking plan "requiring debt restructuring could private sector in a way that we would view as an effective standard," in a statement.
The impact of Greek default would be felt all over the world. The country's debt of 330 billion euros may not be large enough, set off to a new financial crisis, but once the precedent of the euro zone had been set by default, investors would probably the debts of the other members are fighting, including giving up Portugal and Spain.
Alarming is to have the Western banks, including the giant of Wall Street, a tower of credit default swaps built - in the main insurance - the debt of these countries and the costs of payment up to in a standard-would be enormous. While the French and German banks have the most direct exposure to the Greek debt, it is American banks and insurance companies, which has the largest commitments to cover the payments to the guests with SWAps.
Identification of the credit rating agencies standard would have to E.C.B. impose discounts, known as hairdressers, on the Greek debt, which has accepted it as collateral. She would hold more financial pain on banks causing that debt.
Euro-zone finance ministers agreed over the weekend to Athens with funding of EUR 8.7 billion to provide, or $ 12.6 billion from 110 billion euro bailout agreed last year to help the Greek Government function through the summer. The view is attributable to a short-term standard of new aid.
But the Finance Ministers, how a second rescue mission reportedly € up to 90 billion estimated, to keep the country running until 2014, if it is to be hoped that Greece can return to the credit markets.
The sensitive issue of sharing the pain with the private sector suggests that the discussion of the second bailout for months could continue.
French President Nicolas Sarkozy announced June 27, French banks under which banks the most income of establishments which due until the year 2014 to new Greek reinvest securities would Greek debt had agreed to a plan.
"If it voluntary," Mr. Sarkozy said at the time "it would be considered as a standard-sized danger of an increase in the crisis."
Roles on some of the Greek debt agreed operations to Germany's largest banks.
But standard & poor's said Monday that it "" certain types of debt Exchange and similar restructuring as equivalent to a default views: If a transaction is considered a "tortured instead of purely opportunistic" and if it results in "get less value than the promise of the original securities investors."
It was said that both conditions seems on the French proposal.
S. & p. Greece long-term rating CCC, has cut already deep in the junk-e-region.
European officials are anxious that setting from one of said standard, Gilles Moec, an economist at Deutsche Bank in London, to avoid, since that could lead to a crisis in relations with the European Central Bank.
The E.C.B, which itself holds has billions of euros of Greek debt, said it could accept only, the participation of the bondholders any restructuring it would be "completely voluntarily."
The Central Bank - which has Greece help by buying its debt on the secondary market - "do not want to endanger his record, more public", said Mr Moec. "It's one thing to say she will accept Greek Government bonds, it is another thing, something in its balance sheet, which ceased to be paid, the definition is the standard."
"It means not the Greek securities does not want to be paid", he said, adding: "the E.C.B. in would be able to accept it if the final structure was relatively healthy." "One thing that does not want the E.C.B. is any violation of his right to the security to decide, that takes it."
This article, "S. & p. Bank warns plan would cause Greek default," originally in the New York Times appeared.
Copyright © 2011 New York Times
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