Greece became the first euro-zone member to be officially rated in default Monday, 13 years after the single European currency was adopted in what supposed to a be project to strengthen the European Union.
Standard & Poor's on Monday cut Greece's long-term credit rating to selective default from double-C. The move was expected, as S&P said earlier this month it would consider Greece in default if it retroactively added so-called collective-action clauses to its sovereign debt as part of an effort to force creditors to participate in a bond swap offering. Greece's parliament approved that measure late last week, giving S&P the ammunition it needed to cut the rating.ZeroHedge has an important question about Greece's selective default:
Our question for former Goldmanite and current ECB head Mario Dragi: does the ECB allow defaulted bonds to be pledged as collateral within the Euro System?Now's a good time to brush up on debt subordination as it applies to Greece.