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S&P Declared default on Greece

February 28, 2012

Ratings agency Standard & Poor’s downgraded Greece’s long-term credit rating to selective default from double-C. It is a result of a debt write-down deal with private creditors that is an integral part of the second bailout.

Greece became the first Euro-zone country officially to be rated in default, 13 years after the single European currency was adopted to strengthen the European Union.

S&P had said this month that it would consider Greece in default if it added “collective-action” clauses to its sovereign debt, effectively forcing all bondholders to accept a bond-swap offering. S&P says their move was triggered by the fact that if a large majority of creditors accept the new terms then all the creditors need to agree, which would have consequences for bondholders.

Once the swap is carried out next month, the agencies are expected to upgrade Greece.

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