Greece 'likely to default on debt'

28 July 2011

It is likely that Greece will partially default on its debt following the introduction of a new European Union (EU) plan to help out the troubled country.

This is the view of Standard & Poor's (S&P), which reduced the nation's ranking from CCC to CC - just two steps higher than default level - Bloomberg reports.

The proposal will result in bondholders stumping up some of the cash for Greece's second bailout - a package agreed in Brussels last week.

S&P - which dates back more than 150 years - confirmed the action would amount to a default under its rating methodology, adding: "We view the proposed restructuring as a distressed exchange because, based on public statements by European policy makers, it is likely to result in losses for commercial creditors."

The package is to include a €50 billion ($72 billion) contribution from EU leaders and another €109 billion from the International Monetary Fund and governments in the euro region.

By Tony Aynsley

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