S&P: unclear Greek deal will set sustainable path

(WASHINGTON) - Ratings house Standard & Poor's on Wednesday questioned whether a looming deal to restructure Greece's debt would be enough to put Athens on a sustainable fiscal path.

But S&P said a deal could well lead to an improvement in the country's sovereign debt rating, currently CC, just above the level for default.

Frank Gill, S&P ratings chief for Europe, told investors in a video conference the restructuring deal now in front of the Greek government would likely involve private investors like banks writing off, via a debt swap, 70 percent of the 200 billion euros ($265 billion) of the Greek bonds they hold.

"After the restructuring, after the bonds are swapped, we would very quickly take the rating up to a level -- still a low level, but a level that would be more appropriate with our view on whether there is debt sustainability in Greece," he said.

"But again, the question is, given only a small sub-component of the debt will take the haircut, it's not quite clear whether debt will be at levels which we still view as sustainable."

Greece is struggling on the edge of defaulting on some 350 billion euros in debt and has been told by the European Union, the International Monetary Fund and other creditors to undertake more harsh austerity measures like wage cuts and government layoffs to get a new refinancing package.