Debt Restructuring Plans Of Greece Constitute A Default Says S&P

by San Antonio Attorney

Standard and Poor’s warns that the restructuring plans on the debt of Greece would be equivalent to a default.

A week ago, the Greek parliament passed a drastic austerity plan in order to get additional emergency loan from the European Union and International Monetary Fund.

Nevertheless, there is a growing concern that debt reorganization is inescapable.

French and German banking institutions had reached an agreement earlier to rollover loans for the Greeks to give its country an extension to pay back its debts.

This may include effectively reinvesting the income of Greek debt that’s about to mature into newly-issued bonds, which are fixed income securities that can be bought straight from the German and French banks.

According to Standard and Poor’s, a United States based credit rating agency, the similar restructuring plans and some debt exchanges are the same as a default.

The alternatives presented so far for reorganizing the debt of Greece would comprise this type of payment default, the Standard and Poor’s said.

The European bank shares have fell due to the Greece debt worries. Lloyds Banking Group and Royal Bank of Scotland in the United Kingdom fell about 2.3 percent. Societe Generale and Credit Agricole in France slipped 2 percent. Commerzbank in Germany have lost about 1.7 percent.

Eurozone finance ministers have already authorized the most recent tranche of funds for Greece. They are going to give 12 billion euros over the next couple of weeks to aid the Greeks satisfy spending obligations and prevent huge debt default.

On June 29, the Greek parliament has passed the austerity package which the EU and IMF demanded. The members of the Greek parliament supported the measures even though angry protesters were on the streets of Athens.

In May, Greece was provided with emergency loan which was 110 billion euros.

More Information on Greece and its debt crisis can be found in the San Antonio Bankruptcy blog section.

Leave a Comment

Previous post:

Next post: