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Greece Ratings Lowered To 'SD' (Selective Default)

December 6, 2012 Standard & Poor's
•We are lowering our sovereign credit ratings on Greece to 'SD'.•This follows the Greek government's Dec. 3, 2012, invitation to private
sector bondholders to participate in a series of debt buyback auctions,
which under our criteria we view as a selective default.•When the buyback is consummated (which we understand is scheduled to
occur on or about Dec. 17, 2012), we will likely consider the selective
default to be cured and raise the sovereign credit rating on Greece to
the 'CCC' category.LONDON (Standard & Poor's) Dec. 5, 2012--Standard & Poor's Ratings Services
today lowered its 'CCC' long-term and 'C' short-term sovereign credit ratings
on the Hellenic Republic (Greece) to 'SD' (selective default).

We lowered our sovereign credit ratings on Greece to 'SD' following the Greek
government's Dec. 3, 2012, invitation to private sector bondholders to
participate in a series of debt buyback auctions. In our opinion, Greece's
invitation constitutes the launch of what we consider to be a distressed debt
restructuring. Under our criteria (see "Rating Implications Of Exchange Offers
And Similar Restructurings, Update," May 12, 2009), we consider an exchange
offer as tantamount to default under the following two conditions:

•The offer, in our view, implies the investor will receive less value than
the promise of the original securities; and•We believe the offer is distressed, rather than purely opportunistic. We consider that Greece's invitation satisfies these conditions,
notwithstanding that investors may technically accept the offer voluntarily,
and irrespective of whether an event of default as defined by the bond
documentation occurs. In accordance with our criteria, we have therefore
lowered our sovereign credit rating on Greece to 'SD' and our ratings on the
affected debt issues to 'D'.

Under our criteria, we define a restructuring to include buybacks as an
alternative to a potential conventional default, in which the investor or
counterparty stands to fare even worse, and which motivates (at least
partially) the investor's acceptance of such an offer. Standard & Poor's
treats such offers and buybacks analytically as de facto restructuring and,
accordingly, as equivalent to a default on the part of the issuer.

When Greece's buyback is consummated (which we understand is scheduled to
occur on or about Dec. 17, 2012), we will likely consider the selective
default to be cured and raise the sovereign credit rating on Greece to the
'CCC' category, reflecting our forward-looking assessment of Greece's
creditworthiness. In this context, any potential upgrade to the 'CCC' category
rating would reflect, among other factors, our view of the debt relief that is
being delivered through the buy back and its contribution to putting the
sovereign's public finances on a sustainable footing.
Company — Greece
  • Full name
    Greece
  • Registration country
    Greece