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S&P downgrades Greece to 'Selective Default'

Standard & Poor’s downgraded Greece’s credit rating from CC to 'Selective Default' today.

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Pedestrians pass in front of Standard & Poor's Financial Services LLC in New York, in this July 28, 2011 photo. (Scott Eells/Bloomberg via Getty Images) (AFP/Getty Images)

Standard & Poor’s downgraded Greece’s credit rating from CC to “Selective Default” today, Bloomberg News reported.

This makes Greece the first euro-zone member to be officially rated in default, Dow Jones Newswires reported.

S&P made the move following Greece’s decision last week to force losses on Greek government bondholders who refuse to take part in a debt exchange that the country expects to occur next month, CNN Money reported.

According to CNN Money:

In March, Greece is expected to finalize a deal with investors to write down 53 percent of its debt held by the private sector as part of a second 130 billion euro bailout from the European Union and International Monetary Fund.

The German parliament voted today to approve the 130 billion euro rescue package to help Greece stave off bankruptcy.

More from GlobalPost: Germany approves second Greek bailout

In a statement, S&P explained that Greece unilaterally changing the terms of its bond contracts is "a de facto restructuring and thus a default,” CNN Money reported. Earlier this month, S&P had warned that it would consider Greece in default if it added so-called collective-action clauses into its bond contracts, Dow Jones Newswires reported.

The Greek Finance Ministry said that the downgrade was "anticipated, planned for and addressed" by the European Council and the Eurogroup of finance ministers, Dow Jones Newswires reported.

The Ministry added that the SD rating has “no impact in the Greek banking sector as its liquidity effect has been addressed by the Bank of Greece and consequently by the EFSF [the European Financial Stability Facility],” Bloomberg News reported.

The Ministry also said it expects S&P will raise its credit rating once the private sector debt swap is completed, Bloomberg News reported.

More from GlobalPost: Greece reaches deal on austerity
 

http://www.globalpost.com/dispatch/news/regions/europe/120227/sp-downgrades-greece-selective-default