The ECB changes its rules regarding collateral ratings. You almost have to feel for the ratings agencies; when they raise or re-affirm good ratings, they are deemed superfluous, and when they downgrade entire countries, they are ignored.
We will see how the market takes this action and the prospects for the ECB which will hold Billions of Greek debt as collateral in very short order.
FRANKFURT -(Dow Jones)- The European Central Bank said Monday it has decided to suspend the minimum credit rating threshold for collateral eligibility requirements for Greek sovereign debt.
The announcement follows the agreement of a EUR105 billion rescue package for Greece at the weekend by the International Monetary Fund and Greece's partners in the euro zone.
As a result, the ECB will continue to accept as collateral all new and outstanding bonds issued or guaranteed by the Greek government.
The main immediate consequence of the ECB's action is to guarantee that Greek banks, which are the largest holders of Greek government debt, can continue to borrow from the ECB's credit windows.
The decision comes less than three months after ECB President Jean-Claude Trichet had said the bank wouldn't change its rules on accepting collateral for the sake of any single country.