Well, the time has come and gone: Greece missed its 1.5 billion euro repayment to the IMF.
While that is now written in stone, the question as to whether or not the nation has “defaulted” remains clouded. Some suggest the missed payment automatically qualifies as a default, but according to ratings agency Standard and Poor’s, the nation, for the moment, has not.
Here’s why S&P don’t believe Greece has defaulted on its obligations, yet.
“Our sovereign ratings assess a sovereign’s ability and willingness to service financial obligations to nonofficial (commercial) creditors. The rating on a sovereign does not reflect the sovereign’s ability and willingness to service other types of obligations, such as obligations to other governments or obligations to supranationals, such as the IMF or the European Financial Stability Facility (EFSF, AAA/Negative/A-1+). However, our methodology takes into account these obligations’ potential effect on a sovereign’s ability to service its commercial financial obligations.”
So if Greece hasn’t defaulted on its debt overnight, when will it officially default? S&P has an answer for that too:
“We would declare a Greece default if and when the Greek central government missed a payment on a commercial obligation. Greece’s upcoming commercial debt payments include €2.0 billion in treasury bills due on July 10; €83 million on a Japanese yen obligation, due on July 14; and €71 million in interest, due on July 17 on a three-year commercial bond the government issued in July 2014. About €39 billion of Greece’s total medium- and long-term debt is commercial, representing 22% of GDP. All of the remaining €261 billion in debt (excluding €15 billion in treasury bills) is owed to official creditors”.
Based on its assessment, it appears that July 10 will be the date the nation will technically default should it fail to meet its obligations to its commercial creditors.