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Greece Rejects S&P Credit Downgrading, Default Expectations, Dollar and Oil Prices Fall

June 13, 2011

S&P Lowers Greek Rating, Expects Country to Default

France 24, June 13, 2011

By News Wires (text)


US rating agency Standard and Poor's has lowered its valuation of Greece to CCC, citing the likelihood of the country defaulting on its loans. Greece says the move overlooks international efforts to find a solution to its debt crisis.

Standard and Poor's slashed its credit rating for Greece on Monday by three notches to CCC, saying there is a significantly higher probability of a default in the struggling eurozone member.

"The downgrade reflects our view that there is a significantly higher likelihood of one or more defaults, as defined by our criteria relating to full and timely payment, linked to efforts by official creditors to close an emerging financing gap in Greece," said the rating agency.

It said its estimate of a 30 to 50 percent recovery upon default remained unchanged.

"In our view Greece is increasingly likely to restructure its debt in a manner that, under the conditions of any package of additional funding provided by Greece's official creditors, would result in one or more defaults under our criteria," said S&P's Mark Tierney.

This downgrade may be seen as a shot across the bow to European Union plans to force private holders of Greek bonds to participate in a new aid package for Greece by accepting delayed repayment.

European Central Bank executives have argued against any moves that obliged private investors to take part in a Greek bailout as ratings agencies would likely declare Greece in default, causing unknown dangers for the wider 17-member eurozone.

Greece rejects further downgrade of credit rating by Standard and Poor's

ATHENS, June 13, 2011 (Xinhua) --

Greece rejected the new downgrade of its credit ability rating by international rating agency Standard and Poor's on Monday deeper into the junk territory from B to CCC.

Standard and Poor's cut by three notches to an international record low the country's credit rating at the moment, with a negative outlook, forecasting increasing likelihood of a Greek debt restructuring or default in the near future.

The agency's experts argue that the picture appears bleak, due to the widening financing gaps, as debt-ridden Greece has missed targets in the implementation of an EU-International Monetary Fund (IMF) supported plan to exit the debt crisis by 2014.

"Today's decision makes reference to rumors and statements by representatives of the European Commission and European Central Bank. However, it ignores the intense consultations taking place currently between the same institutions and the IMF aimed at designing a viable solution that will cover the financing needs of Greece in the coming years," said a statement released by the Greek Finance Ministry.

The decision also neglects the efforts of the Greek government to avoid any violation of Greece's contractual obligations, and the strong desire of the Greek people to plan for their future within the Eurozone, added the statement, noting that a Medium- Term Fiscal Strategy to be passed by the end of June outlines specific fiscal commitments that will ensure the sustainability of Greek sovereign debt.

Greek media noted furthermore that the new downgrade comes on the eve of a Eurogroup meeting in Brussels on Tuesday and ahead of a significant EU summit next week regarding the release of further aid to Greece.

On June 1 Moody's downgraded the country's credit ability rating from B1 to Caa1 with a negative outlook, triggering a similar statement by the Greek government.

Editor: yan

Dollar falls despite Greece rating downgrade

NEW YORK, June 13, 2011 (Xinhua) --

The U.S. dollar fell against major currencies in late New York trading on Monday, despite the downgrade of Greece's sovereign rating by Standard & Poor's.

On Monday, the rating agency downgraded Greece's sovereign rating by three notches from B to CCC.

The agency also said in a statement that the downgrade reflects their view that there is a significantly higher likelihood of one or more defaults of Greek debt.

However, the euro was barely affected by the news. The shared currency rallied to above 1.44 against the greenback in late trading on Monday.

Meanwhile, Japanese economic data showed that core machinery orders slipped 3.3 percent in April from March, showing that the corporate capital spending was losing momentum. The dollar fell slightly against the Japanese yen despite the disappointing data.

The Bank of Japan was expected to release its monetary policy statement on Tuesday at the end of its two-day monetary policy meeting.

In late Monday trading, the dollar bought 80.19 yen, comparing with 80.32 yen late Friday, and the euro rose to 1.4412 dollars from 1.4355.

The British pound also rose to 1.6370 dollars from 1.6239. The dollar fell from 0.8420 Swiss francs to 0.8380, and bought 0.9767 Canadian dollars, unchanged from Friday.

Editor: yan

Oil falls sharply on Greece's downgrade

NEW YORK, June 13, 2011 (Xinhua) --

U.S. crude oil price fell sharply on Monday as Standard & Poor's downgraded Greece's credit rating by three notches, causing worries about global economic recovery and oil demand.

S&P lowered Greece's long-term sovereign credit rating to CCC, just four steps away from default, from B. The outlook on the long- term rating remained negative, meaning a possibility to cut ratings in the next 12 to 18 months. This caused risk aversion across the crude market.

And concerns over the output increase of Saudi Arabia continued to weigh on the markets. The largest oil exporter of OPEC planned to increase its oil supplies to 10 million barrels per day.

The spread between U.S. crude benchmark and Brent crude extended to a record high of 21.8 dollars. Analysts said that U.S. benchmark was more local and based on the domestic demand and supply, while Brent crude was more international and moved after the worldwide supply-demand relation, which was much tighter.

Currently, U.S. oil demand is getting softer while supplies are rich at Cushing, Oklahoma. But internationally, the oil demand from emerging markets is much stronger and tension in the Middle East brings uncertainties to oil supplies.

Light, sweet crude for July delivery fell 1.99 dollars, or 2.0 percent to settle at 97.30 dollars a barrel on the New York Mercantile Exchange. But in London, Brent crude for July delivery gained 32 cents, or 0.27 percent, to settle at 119.10 dollars a barrel.

Editor: yan

Germany insists private investors bear part of burden in second Greece bailout

BERLIN, June 10, 2011 (Xinhua) --

The German parliament on Friday approved a non-binding motion for aiding Greece on condition that private bondholders bear part of the burden, despite opposition from the European Central Bank (ECB).

Finance Minister Wolfgang Schaeuble urged the German parliament to support additional aid for Greece, which is facing a high risk of default, and reiterated his proposition to involve private creditors in the rescue plan.

Without a new bailout plan, Greece is very likely unable to honor its financial commitments, said Schaeuble, adding that if Greece fails, it will surely impact not only European financial market but also world financial system.

"We must win time with a new package, then the participation of the private sector in the solution is unavoidable," he said.

The minister said Greek bondholders can swap their old bonds for new ones with seven-year maturities, providing more time for the struggling country to get its finances back in order and for the market to rebuild confidence.

But Schaeuble also admitted it was difficult to calculate exactly how much more money Greece needs to survive the crisis. The country remains unlikely to be able to return to financial markets in 2012, he added.

Schaeuble expressed these opinions in a letter to the European Commission, the ECB, the International Monetary Fund (IMF) and 17 member states of the euro area two days ago, a move described by the ECB as an "enormous mistake."

Jean-Claude Trichet, president of the ECB, said on Thursday the central bank opposes any involvement of private bondholders, as it will worsen the current financial turmoil through chain reactions. Rating agencies will see these actions as a "selective default," he argued.

Following the ECB's expression of serious concern, Schaeuble softened his stance, saying a working group including the ECB, the IMF, and the European Commission will work on a solution that makes a fair distribution of risks between taxpayers and private creditors and avoids negative market consequences.

From June 23 to 24, a European summit will be held in Brussels, which is expected to finalize a new rescue package for Greece.

The motion passed by the German parliament will not be legally binding on the government's action at the summit, but will define its basic attitude toward this issue.

Editor: Mu Xuequan

S&P slashes Greece closer to default 2011-06-14 06:58:38 FeedbackPrintRSS

NEW YORK, June 13 (Xinhua) -- Standard & Poor's on Monday downgraded Greece's long-term sovereign credit ratings from B to CCC, just four notches above default, saying the risk of debt default is increasing.

S&P also maintained the outlook on the long-term rating at negative, which means another downgrade is likely in the next 12 to 18 months.

"Risks for the implementation of Greece's EU/IMF borrowing program are rising," S&P said. "given Greece's increased financing needs and ongoing internal political disagreements surrounding the policy conditions required by Greece's partners."

S&P said European policymakers looked increasingly likely to impose a restructuring of Greece's debt -- either via a bond swap or by extending bond maturities. However, any such transactions would be viewed as a "de facto default" according to its criteria.

Monday's move makes Greece the lowest country in S&P's rankings, one notch below Moody's recently downgraded Caa1.

After the downgrade, Greek 10-year bond yields jumped to more than 17 percent for the second time this year, before closing at 16.97 percent.

In response to the rating cut, Greece said the move by Standard& Poor's overlooked the government's commitment to carry on with tough fiscal efforts to repair public finances and remain a member of the 17-member euro currency club.




THE WEEK IN EUROPE Greece: unrest over austerity plan seethes

GREECE Greece on edge as officials decide on new bailout loan

GREECE Moody's slashes Greek credit rating again

Date created : 13/06/2011

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