Brussels' 50% cut on Greek government bond payments represents a 'solvency incident' (credit events). At the same time, however, under the latest agreements reached in the Eurozone, Athens' new issuance rating could improve from C to B (still a “post default” category). This is the position of the American agency Fitch, which contrasts sharply with that of the International Swaps and Derivatives Association. Yesterday evening the association that represents the CDS issuing companies communicated that it did not find any credit events in the agreement. If this were the case, of course, the companies represented by the institution would not have to pay the credit default swap claims.
On the other hand, Fitch's judgment on conclusions reached at the end of the EU summit is overall positive. In particular, the agency believes that "the agreement to significantly increase the size of the state-saving fund" is a "fundamental first step to improve market confidence in the ability of politics to limit the risk of contagion" of the crisis. For this reason Fitch awarded the maximum rating, the by now famous triple A, to the guaranteed debt program of the new EFSF. The increase in Core Tier 1 to 9% was also judged positively.
