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Fitch Downgrades Greek Debt Citing Imminent Default

February 22 2012 Tweet Email This

Fitch cut its rating for Greek sovereign debt from “CCC” to “C” on Wednesday, indicating that the ratings agency believes default is “highly likely in the near term.”

The downgrade comes just one day after the announcement that Greece secured a second bailout of 130 billion euros from its creditors in a deal that would have private investors holding Greek debt accept a debt swap in which they exchange their bonds for lower-value debt.

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“In Fitch’s opinion, the exchange, if completed, would constitute a ‘distressed debt exchange’ in line with its criteria and consequently yesterday’s announcements set in motion the agency’s process for reviewing Greece’s issuer and debt securities ratings,” Fitch said in a statement.

Once the debt swap is complete, Fitch said it will again review its stance on Greece. “Shortly after completion of the exchange with the issue of new securities, Greece’s sovereign rating will be moved…and re-rated at a level consistent with the agency’s assessment of its post-default structure and credit profile,” the statement said.

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To contact the reporter on this story: Emily Knapp at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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