Fitch’s Take on Greek SF Predicated on Orderly Sovereign Default

Published February 6, 2012 11:03 AM EST 1 Min Read

Fitch Ratings continues to expect an orderly debt restructuring for Greece, a view that shapes its opinion on the prospects for Greek structured finance deals.

An orderly restructuring would not disrupt the country’s payment system, the agency said. “This would be the more beneficial outcome for Greek securitizations because with banks benefiting from supra-national institutional support, securitizations should continue to operate effectively,” Fitch said.

All the same, Fitch does not rule out the chance of a disorderly default, which could also precipitate an exit from the eurozone. In this scenario, payment systems might be destabilized, causing interest payments to be interrupted, for instance. Ditching the euro would complicate matters further by almost inevitably resulting in difficulties covering the euro payments on outstanding deals.

Fitch maintains a number of RMBS in Greece at triple-B-minus. That is eight notches higher than the country’s current long-term Issuer Default Rating of ‘CCC.’

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