There was some relief but little surprise for bond markets on March 25 when European Central Bank president Jean-Claude Trichet announced that the central bank wouldn’t be restoring pre-crisis minimum collateral rules. That would have required a minimum credit rating of A3 from Moody’s and BBB+ by Standard & Poor’s to qualify as eligible collateral for the ECB’s repo facility.
It was an issue Greek bondholders had sought to clarify because Moody’s had effectively become the sole arbiter of Greece’s ability to fund itself in the bond markets, because it held the final card...
