Plans to roll over private creditors’ Greek debt run into trouble
PITY the ratings agencies. During the financial crisis they were slammed for being in hock to the people they rated and for being hopelessly wrong on their structured-credit scores. Now they are being slammed for showing some backbone and for being right. On July 5th, for example, Moody’s downgraded Portugal’s rating to junk, prompting Jose Manuel Barroso, the head of the European Commission, to talk darkly of bias. “Our analysis is more refined and complete,” he said (in a Portuguese accent).
That the view of private ratings agencies should matter so much is partly the fault of the Europeans themselves. Take the negotiations on an agreement for private creditors to roll over as much as €30 billion ($43 billion) of Greek debt, to reduce the size of the country’s next official bail-out. A complex proposal advanced by the French banking lobby had been seen as a basis for such an agreement. ...
