Fitch to take debt rollover as default

Fitch Ratings stressed it may well consider placing Greece’s sovereign rating on restricted default should private bondholders agree to a rollover of Greek debt.

In a letter sent to and published by the Financial Times on Tuesday, David Riley, head of Fitch’s Sovereign Rating group, suggested that «based on the public description of the so-called ‘Vienna Plus’ initiative that would entail a ‘voluntary rollover’ of Greek bonds as they mature into bonds with similar terms… Fitch would very likely view such a ‘scenario’ as a sovereign default event and place the Greek sovereign rating into ‘Restricted Default.’»

Despite the favorable reaction to the plan announced by French President Nicolas Sarkozy involving French banks, the Fitch official makes it clear that «it is surprising and unfortunate that so much effort appears to have been invested in circumventing a particular rating outcome.»

He concludes by saying, «If it looks like a default, we will rate it as a default.”

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