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| Greece: Voluntary bank help would be a default | Greece: Voluntary bank help would be a default |
| (40 minutes later) | |
| The Fitch credit ratings agency has said that if commercial lenders roll over their loans to Greece, it will deem the country to be in "default". | The Fitch credit ratings agency has said that if commercial lenders roll over their loans to Greece, it will deem the country to be in "default". |
| As Greece awaits further bail-out money from the EU and International Monetary Fund, private investors are under pressure to extend their loans. | As Greece awaits further bail-out money from the EU and International Monetary Fund, private investors are under pressure to extend their loans. |
| Last week, France and Germany reached a compromise over whether such investors should assume a greater burden, saying any such move should be "voluntary". | Last week, France and Germany reached a compromise over whether such investors should assume a greater burden, saying any such move should be "voluntary". |
| But few think their help is by choice. | But few think their help is by choice. |
| Fitch's comments come as the Greek government is due to face a vote of confidence, a crucial first step towards gaining another 12bn-euro ($17bn; £10bn) loan from the EU and the IMF. | Fitch's comments come as the Greek government is due to face a vote of confidence, a crucial first step towards gaining another 12bn-euro ($17bn; £10bn) loan from the EU and the IMF. |
| If the government survives the vote, Greece's parliament will be asked to back the latest spending cuts - worth 28bn euros - on 28 June. | If the government survives the vote, Greece's parliament will be asked to back the latest spending cuts - worth 28bn euros - on 28 June. |
| 'Junk' fears | 'Junk' fears |
| Fitch Ratings believes that any softening of terms by commercial banks would come only as a result of political pressure and therefore cannot be deemed "voluntary". | Fitch Ratings believes that any softening of terms by commercial banks would come only as a result of political pressure and therefore cannot be deemed "voluntary". |
| Categorising a borrower as "in default" will mean a further lowering of Greece's credit rating. | Categorising a borrower as "in default" will mean a further lowering of Greece's credit rating. |
| This is already deemed to be "junk", meaning that lenders are not expected to get back anything like the value of their original loan. | This is already deemed to be "junk", meaning that lenders are not expected to get back anything like the value of their original loan. |
| A further downgrade to default would mean a fire-sale of Greek loans, as certain investors would no longer be allowed to hold such risky assets. | A further downgrade to default would mean a fire-sale of Greek loans, as certain investors would no longer be allowed to hold such risky assets. |
| Greece is trying to pass austerity measures through parliament in order to qualify for another slice of aid, worth 12bn euros ($17bn, £12bn) from the EU and IMF. The measures, which have cut benefits, public sector salaries and pensions, have sparked protests across the country. | Greece is trying to pass austerity measures through parliament in order to qualify for another slice of aid, worth 12bn euros ($17bn, £12bn) from the EU and IMF. The measures, which have cut benefits, public sector salaries and pensions, have sparked protests across the country. |
| In any case, that new money will still not be enough to keep Greece afloat long-term, and the institutions are planning to provide another bail-out, which could be worth more than another 100bn euros. | In any case, that new money will still not be enough to keep Greece afloat long-term, and the institutions are planning to provide another bail-out, which could be worth more than another 100bn euros. |
| But amid political pressure from certain quarters, particularly the German government, this requires the willing contribution of private lenders. | But amid political pressure from certain quarters, particularly the German government, this requires the willing contribution of private lenders. |
| Any contribution may prove worthless if it is viewed as a technical default. | Any contribution may prove worthless if it is viewed as a technical default. |
| Another agency, Standard & Poor's, has also warned that any attempt to restructure the country's debt would be considered a default. | Another agency, Standard & Poor's, has also warned that any attempt to restructure the country's debt would be considered a default. |
| The third leading agency, Moody's has a rating on Greece's debt that implies a 50% chance of a reneging on repayment within three to five years. |