BRUSSELS (MNI) – The European Central Bank does not expect Greek
government bonds to be downgraded again, but if they are it might have
to reconsider its plan to revert back to pre-crisis collateral rules at
the end of this year, European Central Bank President Jean-Claude
Trichet said Monday.
“At the present moment, I qualified the decisions which have been
taken by the Greek government…as convincing and courageous,” Trichet
said, adding that he expects “all financial institutions will
progressively realize that this is convincing.”
This why “my working assumption is that “we won’t have
difficulties, because there won’t be downgrading of the signature of
Greece,” Trichet told the European Parliament.
“If it should appear that this working assumption is too
optimistic, then we would look at the situation,” Trichet said.
Following the collapse of Lehman Brothers in autumn 2008, the ECB
lowered its minimum acceptable rating on collateral eligibility from A-
to BBB- as part of its non-conventional support measures. It always
intended to return at the start of 2011 to the old framework, which
stipulates that a security must have a rating of A- or higher from at
least one of the rating agencies.
Greek debt would still qualify under the old rules, since it has an
A2 rating from Moody’s. However, now that Standard & Poor’s and Fitch
have cut their rating to BBB+, a downward revision from Moody’s would
create problems if the ECB returned to its initial threshold.
Until recently, the ECB insisted that it would not keep any
emergency measure in place longer than anticipated for the sake of a
single country.
–Frankfurt bureau. Tel: +49-69-720-142. Email: frankfurt@marketnews.com
[TOPICS: M$$EC$,M$$CR$,M$X$$$,MT$$$$,MGX$$$]
