17.01.2012

By Simon Miller

A Greek default is inevitable according to the managing director of Fitch Ratings.

Edward Parker, managing director for Fitch's Sovereign and Supranational Group in Europe, the Middle East and Africa said although Greece would default on its debt, it would do so in an orderly manner.

"It is going to happen. Greece is insolvent so it will default," Parker said. ""So in that sense it shouldn't be a surprise to anyone."

Fitch believed that even a voluntary haircut agreement would constitute a default. Talks are currently suspended between Greece and private debt holders after failing to come to an agreement over taking the 50% haircut.

"We have said for a long time that we don't think this private sector involvement is the way to go and we would treat it as a default. It clearly is a default, however they try to spin it," he said.

Speaking to Reuters at a conference in Stockholm, Parker added that a disorderly default would be the worst result.

"That, would be, for us, the really damaging situation, but one which we are certainly not expecting to happen because, clearly, in a rational situation you would think Greek politicians and European policy makers would ensure that it doesn't happen."

Parker's warning came the day after Standard & Poor's European sovereign ratings unit Moritz Kraemer said Greece would default on its debt.

Speaking on Monday Kraemer told Bloomberg TV: "Greece will default very shortly. Whether there will be a solution at the end of the current rocky negotiations I cannot say. There is a lot of brinksmanship on and a disorderly default will have ramifications on other countries but I believe policymakers will want to avoid that.The game is still on."