S&P: Greek Rescue Plan Would Count as a Default

Credit rating firm rejects French banks' plans
By Kevin Spak,  Newser Staff
Posted Jul 4, 2011 11:19 AM CDT
People withdraw money from a cashpoint at a bank in Monastiraki on June 21, 2011 in Athens, Greece.   (Getty Images)
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(Newser) – Greece got yet more bad news today, when Standard & Poor's issued a statement saying that a proposed rescue plan from banks in France "would likely amount to a default" as far as it was concerned. French banks planned to roll over their holdings in the country's debt, and German banks had said they'd consider doing the same. But S&P says that counts as defaulting, because the banks would wind up with "less value than the promise of the original securities," according to the AP.

The statement threw cold water on European markets that had been buoyed by Greece's Austerity vote, and put a major monkey wrench in Europe's rescue plans. "A default is exactly what the European politicians want to avoid," says one market analyst. "I imagine there are a lot of phone calls being made between the European political elite and the bosses at S&P." Even a "selective default" like this one could trigger insurance claims on Greek bonds, and wreak havoc on financial markets.

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