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Moody’s slash Greece’s credit rating further

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by Kay Mitchell

Moody’s has cut Greece’s credit rating again today – by three notches from Ba1 to B1 with a negative outlook.

The ratings agency now has the lowest rating for Greece of all the major credit agencies and has become the first to categorise Greek Government debt as “highly speculative“.

The country’s rating is now further into junk territory – and is now just five notches from the lowest possible rating.

Moody’s cited considerable risks to the country’s austerity measures and risks of a debt restructuring.

Last June, Moody’s cut Greece’s credit rating to “junk” status from A3 to Ba1 and, at the time, said 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.

Meanwhile, the agency said today: “The fiscal consolidation measures and structural reforms that are needed to stabilise the country’s debt metrics remain very ambitious and are subject to significant implementation risks.

“The likelihood of a default or distressed exchange has risen since its last downgrade of the Greek government debt rating in June 2010,” the agency added.

However, the downgrade met with criticism from the Greek Government, who described it as “completely unjustified”.

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News posted: March 7, 2011

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