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Moody’s downgrade Greece to ‘junk’ status

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by Kay Mitchell
Moody’s downgrade Greece to ‘junk’ status

Moody’s credit rating agency has cut Greece’s credit rating to “junk” status from A3 to Ba1 but said the outlook is stable.

Meanwhile, the agency also downgraded the country’s short-term issuer rating to not-prime from Prime-1.

According to Moody’s, there was still “considerable uncertainty” surrounding the impact of tough austerity measures implemented to slash the country’s budget deficit.

Greece is attempting to cut its deficit from 14% of GDP to 3% by 2014 but the tough measures have met with anger from workers who have staged protests.

Furthermore, Greek pensioners took to the streets over the weekend to demonstrate their anger against budget cuts.

The move comes just two months after Standard & Poor’s (S&P) cut the country’s credit rating to BB+ from BBB-.

Fitch also downgraded Greek Government debt to junk status.

Meanwhile, commenting on its decision to downgrade Greece’s crediting rating, Moody’s senior analyst Sarah Carlson said: “There is considerable uncertainty surrounding the timing and impact of these measures on the country’s economic growth, particularly in a less supportive global economic environment.

“This uncertainty represents a risk that leads Moody’s to believe that Greece’s creditworthiness is now consistent with a Ba1 rating, a rating which incorporates a greater, albeit, low risk of default,” she added.

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News posted: June 15, 2010

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