Moody’s declares Greece in default
Moody’s Investors Service has declared Greece in default on its debt, despite an announcement by the Greek government that a large number of private creditors had signed on to a debt exchange plan. - The US-based credit rating agency issued a statement on Friday, saying that “even as 85.8 percent” of the holders of Greek government bonds had agreed to the plan, the “exercise of collective action clauses that Athens is applying to its bonds will force the remaining bondholders to participate.” “According to Moody’s definitions, this exchange represents a 'distressed exchange' and therefore a debt default. “The exchange amounts to a diminished financial obligation relative to the original obligation,” the statement added. Moody’s also said the debt swap deal “has the effect of allowing Greece to avoid payment default in the future.” On Friday, the Greek government announced that a large majority of private creditors had signed on to a debt exchange plan expected to cancel about 107 billion euros (143 billion dollars) in Greek government bonds.