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German and French proposals to restructure up to €30bn (£28bn) of Greek government debts were thrown into disarray after ratings agency Standard & Poor's said they amounted to a "selective default". The decision placed Germany and France on a potentially disastrous collision course with the European Central Bank (ECB). The proposals would have seen investors inject billions of euros into Greece by rolling over maturing Greek debt into new 30-year bonds. They are part of a broader €110bn rescue package, the details of which have yet to be finalised. The debt-swap proposals were designed to meet Berlin's demand that investors bear some of the costs of the bailout, since the terms of the agreement meant bondholders would end up out of pocket. However, because the proposals left bondholders nursing losses, S&P yesterday ruled that they would amount to a default on the debt. This sets up Germany and France for a clash with the ECB. The proposals are contingent on Greece not defaulting on its debt, because the central bank has said it will not accept defaulted bonds as collateral for loans. But any deal that satisfies German demands that bondholders take a share of the losses is doomed to failure since, based on the S&P ruling, it would trigger a default.