Greek default is essentially a given: S&P

Greece is trying to reach a deal with private sector creditors that would pave the way for additional bailout funding.

NEW YORK (CNNMoney) -- Greece will eventually default on its debts, even if the nation reaches a deal with the private sector to restructure its debts, according to a panel of experts.

John Chambers, head of sovereign ratings at Standard & Poor's, said Tuesday that the deal being negotiated between Greece and private sector investors would "in all likelihood" qualify as a default.

The proposed restructuring aims to reduce Greece's debt load to 120% of its economic output by 2020, from 160% currently.

But even at that level, Greece's debt burden would still be "very high" and the nation's credit rating will remain "very low," said Chambers.

S&P could assign Greece a "selective default" rating by the fall, according to Chambers.

Chambers made his remarks during a panel discussion on European sovereign debt hosted by Bloomberg Link in New York.

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All three panelists predicted that Greece would eventually default on its debts. But a default may not lead to a full-blown debt contagion that would take down Italy and Spain, the experts said.

"It's not a given that Greece's default would have a domino effect in the eurozone," said Chambers.

In addition, Chambers said Greece may eventually return to the private market for financing if the government can succeed in reforming its economy and balancing its budget.

"It all depends on the policies you have in place," he said.

Meanwhile, a top official from the European Central Bank downplayed concerns about a default by Greece.

Jose Manuel Gonazalez-Paramo, a member of the ECB executive board who also spoke at Tuesday's event, said simply "a default should not happen."

Gonzalez-Paramo noted that the ECB is not directly involved in the talks with the private sector, but said "my impression is that we are close to the end of theses negotiations."

The talks have hit a snag over the interest rate investors will be paid on new securities they are to be given in exchange for Greek government bonds.

Eurozone finance ministers indicated late Monday that the rate should be below 4%, under terms agreed to in October. But the private sector, as represented by the Institute of International Finance, is pushing for a deal that would imply rates above 3.5%.

Hans Humes, president and chief investment officer of Greylock Capital Management, said the talks are becoming coercive.

Greylock is one of the private institutions listed as a member of the IIF steering committee negotiating with the Greek government on behalf of bondholders.

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Humes said he has not been "at the table" for some time, but added that he will take part in talks set for next week in Paris.

Speaking at Tuesday's event, Humes said the negotiations have been difficult because "there's a dysfunctionality in the decision-making process" on the other side of the table.

"We were led to believe that what we put on table was the middle ground," he said. "Then they came back and said that's not true."

Humes stressed that the private sector is eager to avoid a so-called disorderly default by Greece, since that could set a dangerous precedent for other debt-stricken nations in the eurozone.

The talks are approaching the "threshold of what can be considered voluntary," he said, adding, "It's very difficult to predict where things will be in two weeks."