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S&P warned that the re-profiling of loans would almost certainly be considered a default and lead to a further downgrading of Greece's debt. "Such a lengthening of maturities would constitute a default under our criteria because the sovereign debtor will pay less than under the original terms of the obligation," it said. A further downgrade would increase Greece's already sky-high borrowing costs. The yields on 10-year bonds are already in excess of 16%. S&P said that testing the effect of a voluntary exchange would be a tougher challenge but any hint of the word voluntary being used to disguise an imposed cut in loan valuations would also trigger a default notice from the ratings agency and a subsequent downgrade. Jim Reid, a credit strategist at Deutsche Bank, warned that a technical downgrade was unlikely to stop the EU going ahead with a restructuring of Greece's loan book. He said that EU banks could maintain the nominal value of the loans on their balance sheets despite the view of S&P and other ratings agencies that the loans were worth less after the restructuring. He said the banks and the EU would disguise the real effect of the restructuring. Without a material cut in loan values, hedging instruments, known as credit default swaps (CDS), can remain untouched. CDSs act as a form of insurance against a bond default by a company or country.