As expected, S&P has proceeded to downgrade Greece to “SD” and the list of PSI eligible securities to “D” following the CAC legislation onto Greek Law Bonds and the launch of the large scale voluntary PSI offer.
This move was pre-announced and all its consequences have been anticipated, planned for and addressed by the relevant decision of the European Council and the Eurogroup. The downgrade has no impact in the Greek banking sector as its liquidity effect has been addressed by the Bank of Greece, and consequently by the EFSF.
The Greek sovereign will remain in “SD” rating while the PSI offer is open and upon completion of the PSI the sovereign is expected to be re-rated upwards.