Greece Faces ‘Restricted Default’ on Debt Accord, Fitch Says

Fitch Ratings said Greece will be considered a “restricted default” after the 159 billion-euro ($229 billion) European bailout unveiled yesterday, given the plan includes getting bondholders to assume part of the cost.

“The proposed debt exchange implies a 20 percent net present value loss for banks and other holders of Greek government debt,” Fitch said today in an e-mailed statement. “An exchange that offers new securities with terms that are worse than the original contractual terms of the existing debt and where the sovereign is subject to financial distress constitutes a default event.”