The ratings agency has predicted an orderly debt restructuring for Greece as the focus shifts from whether Greece will default to when and what form it will take.
While Fitch has said it expects an orderly default that ensures a payment system is in place, leaving the indebted country to operate effectively, a disorderly default cannot be ruled out.
“A disorderly default, which may include an exit from the eurozone, cannot be wholly discounted and would yield a more detrimental outcome for Greek structured finance deals,” Fitch analysts report.
“A disorderly default would disrupt payment systems leading right down to structured finance noteholders.
“Interruption of interest payments by an issuer would constitute a note default, though amounts due may still be recovered eventually.”
The introduction of a devalued drachma would create further problems for the euro area as it would result in a shortfall in euro-denominated notes.