Ratings agencies are right to take a hard line on Greece

Credit rating agencies receive a lot of flak (much of it deserved: in a rational world, they would have been sunk by the top grades they awarded to sub-prime US mortgage junk) but their hard-line stance over a restructuring of Greek debts should be applauded. A sovereign bond should do what it says on the tin. If an investor doesn't receive a coupon on the date originally advertised, that's a default. It's irrelevant if investors are rolling over their loans into a longer-dated instruments. If the roll-over implies inferior terms, as it surely would in the Greek case, the investor has lost. The rating agencies' refusal to be flexible will infuriate eurozone leaders given that a declaration of a default could have serious market consequences. But the Greek situation requires realism – honest ratings are welcome.