PARIS (MNI) – Greece’s Finance Ministry said Friday it was
surprised by Standard & Poors’ decision late Thursday to place Greek
sovereign debt on “CreditWatch negative.”

The Greek Finance Ministry said the S&P decision “comes as a
surprise,” given the “early wins” thus far of the country’s economic and
fiscal reform program.

S&P cited the recent proposal of Eurozone finance ministers for a
future European Stability Mechanism, to start after 2013, under which
official creditors lending via the ESM would have preferred status over
private creditors. This would prejudice the ability of private creditors
to be repaid, S&P said.

The decision means that S&P is eyeing Greek sovereign debt for a
possible downgrade from its current BB+ status.

Under the proposed terms of the ESM, a restructuring of debt — in
which preferred status would make a difference — only kicks in once a
country is declared by European authorities to be “insolvent.” The S&P
decision therefore strongly implies that the rating agency fears Greece
will ultimately be insolvent and have to restructure its debt.

The Finance Ministry contested this notion. “The approach by S&P
relates only to countries potentially insolvent after 2013 and cannot
apply to Greece, which already receives support that helps to resolve
its current debt problem with very good results so far,” it said.

The full text of the Finance Ministry’s statement is below:

“The S&P decision to place Greece on negative credit watch comes as
a surprise, following the early wins of the Greek economic programme in
terms both of fiscal consolidation and competitiveness boosting reforms.

The decision is based solely on developments outside Greece and, in
particular relates to the proposed European Stability Mechanism (ESM) to
be introduced after 2013.

The decision constitutes an interpretation of the ESM impact on the
market which disregards its potential effect on reducing uncertainty.

In any case, the approach by S&P relates only to countries
potentially insolvent after 2013 and cannot apply to Greece, which
already receives support that helps to resolve its current debt problem
with very good results so far.”

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