According to S&P’s Moritz Kraemer, as reported by Bloomberg (off of the DJ Newswire):
As for Greece, Kraemer said the ratings agency expects the country to default on its debt “very shortly,” adding that he cannot predict if negotiations will succeed.
S&P just downgraded the EFSF to AA+, which knocks out its required AAA rating for the bailout fund. According to a report supplied by DoctoRx, from the Daily Telegraph:
The problem is that, of the €315bn of Greek debt outstanding, only €7.8bn is covered by Greek CDS. The vast majority of Greek debt is held by European banks, which have little insurance on their exposure.
Ignore all the talk that this is not a significant event. The more reassuring the parties, the more likely the opposite will happen.
Not surprisingly, Fitch also made another announcement about Greece’s default and addressed the debt payment on March 20. I think this will start to have influence on markets as of the end of February. This the shape of things to come. Current rally is just a 2-month-lasting dream.