S&P downgrades Greece to selective default (by Wallace Witkowski)

SAN FRANCISCO (MarketWatch) -- Standard & Poor's said late Monday it downgraded the sovereign credit ratings of Greece to selective default, or SD, because collective action clauses recently put into certain debt agreements. S&P had previously had a CC long-term rating and a C short-term rating on Greece. "The effect of a CAC is to bind all bondholders of a particular series to amended bond payment terms in the event that a predefined quorum of creditors has agreed to do so," S&P said in a statement. "In our opinion, Greece's retroactive insertion of CACs materially changes the original terms of the affected debt and constitutes the launch of what we consider to be a distressed debt restructuring." In a response, the Greek finance ministry said the SD rating was expected and will have no impact on the country's banking sector.

German parliament approves second Greek bailout (by William L. Watts)

FRANKFURT (MarketWatch) -- Germany's parliament on Monday backed the 130 billion euro ($174 billion) bailout for Greece. The Bundestag approved the plan, which was agreed by euro-zone finance ministers last week, in a 496-to-90 vote, with five abstentions. That gives German Chancellor Angela Merkel permission to back the bailout when European Union leaders gather later this week at a summit meeting to formally approve the package. Earlier, Merkel urged lawmakers to back the package but acknowledged there was no guarantee it would succeed.