It's not nice to start the week on a downer, but that's what's happened at Greek bank Piraeus, which has had its debt and credit ratings downgraded to a "D" default rating by Standard & Poor's.
Last Thursday the Greek-based bank announced it was offering to exchange around €16.2m (£11.8m) of Tier One debt, €211.2m of Tier Two debt and €365.2m of outstanding senior notes for shares or cash.
The offer constitutes a “distressed exchange,” said the ratings agency, because investors will receive less than the value of their original securities as the new instruments would be of a lower ranking in the bank's capital structure.
The combined cash and equities required, around €592.7m, amounts to almost all Piraeus' balance sheet, excluding customer deposits.
The S&P note said:
Following the launch of the offer, and taking into account the capital controls which are still in place in Greece, we consider that Piraeus is in default on most of its on-balance-sheet financial obligations, according to our methodology. Combined, the securities subject to the offer amount to approximately €592.7 million.
Piraeus' stock is already rated "D", and now S&P has downgraded its senior and unsecured debt issue ratings to D as well.
The first phase of the swap started on Thursday, with the bank issuing non-transferable receipts for the debt, it expects to then offer investors equity or cash equal to the then-current market value of the instruments being exchanged on 9 November.