Fallout from a downgrade to default won't affect credit-default swaps insuring Greece's debt, according to the rules of the International Swaps & Derivatives Association. A credit event that would trigger the swaps is decided by ISDA's Determinations Committee, which meets at the request of its members, including traders and investors.

A total of 4,263 contracts insuring a net $3.2 billion of Greek debt were outstanding as of Feb. 17, according to the Depository Trust & Clearing Corp., which runs a central registry for the market. ISDA has indicated that a voluntary exchange doesn't meet the conditions to declare an event of default.

Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements.

Once the debt exchange is completed, Greece will be moved out of the RD category and “re-rated at a level consistent with the agency's assessment of its post-default structure and credit profile,” New York-based Fitch said in today's statement.

In emerging markets, the process has typically taken “a couple of months,” though Jamaica spent one day rated RD in 2010, according to London-based Paul Rawkins, Fitch's primary analyst on Greece. “With Greece, the onus will be on completing the process as quickly as possible.”

S&P, Moody's

S&P rates Greece at CC, two steps up from a default rating. Moody's said in December it will cut the country's Ca grade by one level to C if the debt exchange means the so-called net-present-value loss on its bonds is greater than 65 percent.

Moody's is assessing Greece's bailout and will comment in due course, according to a spokeswoman for the ratings firm who declined to be identified.

Greek Finance Minister Evangelos Venizelos repeated today that a formal invitation for the bond exchange will be made by Feb. 24. Real losses from the swap may be more than 70 percent, said Andreas Koutras, an analyst at ITC Markets in London.

Greece needed to get its second bailout from European governments or risk a default that could endanger the 13-year-old monetary union by sending Greece crashing out of the euro. That move isn't foreseen in the treaties and might call into question the continued membership of other stressed nations such as Portugal and Ireland.

“We're treating Greece as a unique experience in a euro-zone context,” said Fitch's Rawkins. “We can highlight differences with other countries including that the programs are working in Ireland and Portugal and in Greece they weren't. Current account imbalances are coming down in Ireland and Portugal and in Greece they aren't.”

The country's debt was forecast to balloon to almost double the size of its shrinking economy this year without the write-off, the European Commission said in November.

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