Moody cut its rating the Government long term of the Portugal to a n.p.o. rating from Ba2 to Baa1 links and said that the Outlook is negative, suggesting more downgrades lie in store.
The rating agency cited the risk that Portugal will need a second plan to rescue before she can tap bond markets once again, and that the lenders from the private sector must share the pain.
He also warned that Portugal may not match the financial objectives, it worked with the European Union and the Monetary Fund International under its plan to rescue because the "formidable challenges that the countries face in reducing spending, increase the compliance of tax, economic growth and the support of the banking system."
Rating agency actions are passed to the scene in Europe. Standard & Poor, said Monday that a proposal by French banks to help the Greece to meet its medium-term funding needs would be a de facto default, since banks would be required to roll over loans for a longer term to a lower interest rate. That deflated hopes that the problems of the Greece could be under control soon.
"We continue to work for a possible solution", Michel Pébereau, Chairman of BNP Paribas, the biggest French Bank, said Tuesday to the Conference of Paris Europlace, a rally attended by hundreds of international bankers.
With the Greece effectively bankrupt, French and German banks want to give Athens more time to repay the loans as they come due. But they are having to return to the drawing board, after the Standard & Poor rating agency, said Monday that such a measure would be the equivalent of a defect because the banks should wait longer to be reimbursed and the value of Greek bonds would be reduced.
That deflated hopes that the problems of the Greece could be under control soon. If the proposals do not, work Mr. Pébereau said, "we will come with something else."
French and German bankers were scheduled to meet Wednesday morning at the headquarters of BNP Paribas in Paris with representatives of the Central Bank, under the auspices of the Institute of International Finance, an association of major financial companies of the world, to discuss the way forward, said the people informed of the plan were not allowed to speak publicly.
Banks are to discuss the consequences of the decision of the s. & P. which Greek proposal to refinance the debt, would be a "selective default", as well as what would be a true by default, the people said.
The difference is crucial, because default all the European Central Bank would not able to accept the Greek debt as collateral.
"Everyone here is anxious, said an Executive with the French unit of a major U.S. financial institution, which was not authorized to speak publicly." The world is interconnected. It is not only a problem for the Greece. All banks are nervous and strongly want a solution. »
Investors seek not only to what support financial Greece receives from its European partners and the Monetary Fund Greek International, but also to whether the Greece private creditors could declare losses on their holdings of debt, which would affect the balance sheets of banks. Banks are seeking to obtain clarity on how large any losses can be before they must report quarterly earnings once, near the end of September.
A rival of s. & P., Investors Service of Moody, said Tuesday that banks could have on their existing Greek bonds book losses if they choose to roll over maturing debt.
French bankers had not contacted the rating agencies to know their proposal to refinance the Greek debt to determine whether the agencies would consider such default action. "The French banks have jumped too soon," said a banker involved in the discussions.
Finance Ministers the euro reached an agreement last week to keep the Greek Government operating through the summer, but put off the coast of the question of how to provide a second rescue plan to meet its needs for funding through 2014.
There is broad agreement that a kind of debt relief is necessary, and responsible, especially in Germany and the Netherlands, want banks bear part of the pain of a debt restructuring. The negotiations are complicated by the fact that a declaration of default by rating agencies could cause a dangerous escalation of the crisis.
The German Chancellor, Angela Merkel, said Tuesday that the views of the I.M.F., the European Central Bank and the European Commission should be given more weight than those of the agencies rating, Associated Press reported from Berlin.
"I hope especially the case of these three institutions," said Ms Merkel.
A sign of how heavy the calculation rescue plans became, Superior Court of the Germany Tuesday heard a suit filed a year by six plaintiffs who argued that the Greece German aid was unlawful under European rule which prevents the u. the Member States to take on the obligations of the Governments.
The case was serious enough that Finance Minister Wolfgang Sch?uble has been arguing that the Government had no choice but to the return of aid for the Greece.
"A common currency cannot do without the solidarity of all members," The Associated Press cited Mr. Sch?uble said.
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