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PSI: Greek Government Cheers & Activates CACs, Fitch Downgrades to “Restricted Default”…

The day started with euphoria in the Greek government, with Finance Minister Evangelos Venizelos expressed satisfaction about the PSI and said that the strong response of private-sector investors to the country΄s EUR206 billion debt restructuring plan was unprecedented and had surpassed expectations.  “The response exceeded all expectations” Venizelos told the Greek parliament on Friday morning. A few hours later and while speaking to reporters Venizelos announced that he would activate the Collective Action Clauses and told the media that “private-sector bondholders that rejected the bond swap were naive in thinking they would be paid in full while participants in the swap would suffer the reduction in principal.”

After the teleconference with the Eurogroup, where he got the green light for the CACs, Venizelos activated the enforced participation of Greek-law bonds at 6 p.m. local time.

While Venizelos was preparing the CACs decision, ratings agency Fitch proceeded to downgrade Greece to “restricted Default” status.

“Fitch Ratings has downgraded Greece΄s Long-term foreign and local currency Issuer Default Ratings (IDRs) to ΄RD΄ (΄Restricted Default΄) from ΄C΄ following today΄s confirmation from the Greek government and eurozone officials that the exchange of Greek government bonds will proceed.The downgrade to ΄RD΄ reflects Fitch΄s previous commentary that the exchange would constitute a sovereign default event under the agency΄s distressed debt exchange (DDE) rating criteria, and follows the downgrade of Greece to ΄C΄ from ΄CCC΄ on 22 February. Greece΄s Short-term foreign currency IDR remains unchanged at ΄C΄. The euro area Country Ceiling, which is applicable to all euro area member states, also remains unchanged at ΄AAA.΄” (

The Athens Stock Exchange closed at -2.15%.

IMF-Lagarde on PSI : “It smells Spring!”

What was the good news of the day? That the Eurogroup was happy and Jean-Claude Juncker blessed the release of the first tranche of the €130-billion aid package. 35.7 billion euro are expected to be given to Greece before March 20th, when a bond worth 14.4 billion euro matures. Of course, this has undergone a”haircut” too.

Was it indeed a “good day” for the country as Venizelos told Greeks this morning? As we have many times said before: “Greece is saved, Greeks are bankrupt”. With unemployment at 21%, recession at -7% and additional austerity measures to come in June, I see no “good day” around. 

However I will credit Venizelos with one thing he was right about. He said that it is also a ‘historical day’. Indeed. The 9. March 2012 will go into history as the day when Greece officially default. Even at 53.5%.

PS I hear already the PASOK-Nea Dimokratia slogan at the elections: “We saved you from bankruptcy!”


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  1. “PS I hear already the PASOK-Nea Dimokratia slogan at the elections: “We saved you from bankruptcy!””

    But who’s going to save them from bankruptcy??