There were two striking reactions to Standard & Poor’s three notch downgrade of Greek debt yesterday to near default. The predictable one from Brussels came from politicians in the Socialists and Democrats Party who called the move, on the eve of a crucial debt crisis meeting in Brussels, “outrageous, sinister and irresponsible”. In contrast, the reaction from the credit markets was more nonchalant: they barely raised an eyebrow.

While left wing politicians fumed that S&P had cut Greece's sovereign credit rating to CCC, a level just above a default, the reality is that a default had already been priced in by credit and derivative markets for months.