“this exchange represents a ‘distressed exchange’, and therefore a debt default”

Moody’s Investors Service says that it considers Greece (C/no outlook) to have defaulted per Moody’s default definitions further to the conclusion of an exchange of EUR177 billion of Greece’s debt that is governed by Greek law for bonds issued by the Greek government, GDP-linked securities, European Financial Stability Facility (EFSF) notes. Foreign-law bonds are eligible for the same offer, and Moody’s expects a similar debt exchange to proceed with these bondholders, as well as the holders of state-owned enterprise debt that has been guaranteed by the state, in the coming weeks. The respective securities will enter our default statistics at the tender expiration date, which is was Thursday 8 March for the Greek law bonds and is currently expected to be 23 March for foreign law bonds. Greece’s government bond rating remains unchanged at C, the lowest rating on Moody’s rating scale.

Moody’s understands that 85.8% of debtholders holding Greek-law bonds issued by the sovereign have agreed to the exchange, with the vast majority of remaining bondholders likely to be drawn in following the exercise of Collective Action Clauses that will be inserted pursuant to a recent Act by the Greek parliament. The terms of the exchange entail a discount — a loss to creditors — of at least 70% on the net present value of existing debt.

Read More | “Moody’s comments on Greek debt exchange” | Moody’s Investors Service