Fitch: 50% Greek Haircut Would Keep Credit Rating Low

Author: Market News International | Category: News

LONDON (MNI) – Fitch Ratings says the decision of EU leaders to
push for private investors to take a 50% haircut on Greek debt would
result in a post-default rating for the country.

“Fitch Ratings says an EU invitation to private investors in Greek
government debt to exchange their bonds for new debt with a 50% lower
notional value would likely result in a post-default rating in the ‘B’
category or lower depending on private creditor participation”.

“Greece would still have a large amount of debt outstanding, its
growth prospects are weak and its willingness to implement structural
reforms may dissipate”.

In other comments, Fitch also expressed some scepticism as to
whether the decision to boost an already ambitious Greek
privatisation programme will be effective.

“The EU communique makes reference to the potential contribution of
privatisation receipts: these could deliver a material reduction in the
debt/GDP ratio, providing that the programme was fully implemented.
However, Fitch views with some caution the apparent commitment to
increase the Greek privatisation programme by an additional E15bn,
given the already ambitious nature of the existing E50bn programme”.

–London bureau: +4420 7634 1624; email:

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