For a long time analysts have been arguing about whether Greece will default on part of its debt – leaving its creditors to take a “haircut”. This column argues that this prospect is becoming more and more likely.
Many analysts long ago predicted that Greece would have to default on part of its debt or, as they say in the markets, investors would have to take a “haircut.”1 It looks like they are getting closer to being right.
On 9 May 2011, Standard & Poors downgraded the Greek debt by reducing its ratings from BB- to B, for the long term, and from B to C, for the short term. The downgrade reflects
- the fact that the fiscal target (a reduction of the fiscal deficit to 9.6% of GDP) was not met (the deficit was 10.5%) and
- the opinion that the Greek debt is unsustainable.
Πηγή: Voxeu