Standard & Poor's has downgraded Greece's credit rating to "selective default" because of steps the country took last week to force its bond holders to accept steep losses.
Greece is pushing private-sector holders of its debt to accept a massive bond swap. Under the swap, Greece would provide new bonds with less than half the face value of the original debt and at a lower interest rate. The swap would reduce Greece's debt load by $142 billion.
The swap is part of a broader agreement with European leaders that will provide Greece with a second bailout worth about $173 billion.
Greece's government last week required all bondholders to accept the terms of the swap once a certain proportion do so. S&P says that constitutes a "distressed debt restructuring."