S&P Declares Greece in Default

http://online.wsj.com/article/SB10001424052970203833004577249831718108646.html

Greece became the first euro-zone member officially to be rated in default, 13 years after the single European currency was adopted to strengthen the European Union.

Standard & Poor's cut Greece's long-term credit rating to selective default from double-C. The move was expected, as S&P said this month that it would consider Greece in default if it added "collective-action" clauses to its sovereign debt, effectively forcing all bondholders to accept a bond-swap offering. Greece's Parliament approved that measure last week.

Moody's Investors Service and Fitch Ratings also are likely to place Greece in default. The ratings companies deem an issuer in default any time it fails to pay back creditors in full and on time.

The bigger question remains whether the action triggers payments on credit-default-swap contracts, a form of insurance against a bond default or restructuring.