The Telegraph: Greece to Default.. misleading headline?

North_West_Art

I have just spotted this and read through it.. I wonder is the headline misleading or will there be a controlled default, and why are the media here not carrying the story?
http://www.telegraph.co.uk/finance/financialcrisis/8653634/Greece-to-default-as-EU-agrees-159bn-bailout.html

later12

Without wanting to get too much into the politics of this, lets just go into the definitions. It looks as though yes, Greece will experience a credit event. To call it a 'default', so outright, might be misleading, but it is a term with which most people can identify.

The Telegraph are anticipating that either the credit ratings agencies (or the more important body, ISDA) will sit down and have no choice but to say 'yes, a credit event ('default') has happened here'. It would not be surprising if that happened in the case of the credit ratings agencies now.

But it doesn't necessarily matter. Because the ECB are going to continue to support the Greek banking system anyway, under the new agreement.

Calling this a default is, at best, jumping the gun. But 'default' itself is not necessarily a helpful or a 100% accurate word to use either way.

daheff

when most people here "default" they think complete non-repayment.

However the market (and specifically ISDA) would see a default as any substantial difference in repayment of the loan vs the original agreed terms.


So if Greece had agreed to repay in full over 10 years and then said, actually we'll repay in full over 15 years....its technically a default.

later12

Apparently the last entity to have completely not paid up, and left its investors high and dry was North Korea, 1984. There has not been a such a total sovereign default in my lifetime, or in the lifetime of many boards users. So that will show you how rare and extreme a true repudiation-default can be.