Greece falls deeper into junk zone on Moody’s downgrade
Moody’s has cut its credit rating of Greece by three notches, placing it deeper into the junk category, on concerns it will not be able to stabilise its debt pile.
The ratings agency slashed Greece’s rating from B1 to Caa1 while maintaining its negative outlook.
The move leaves Greece with a worse credit rating than Montenegro, and on a par with Cuba.
Moody’s downgraded the country, warning there is a growing risk peripheral European countries will not be able to stabilise their debt positions without a restructure.
However, Greece hit back, claiming Moody’s is not taking into account the government’s attempts to meet its fiscal targets for this year.
The downgrade comes after the European Central Bank supported the idea of banks rolling over Greek bonds to help the country salvage its financial situation. This would be an alternative to the country restructuring its debt.
Greece has been locked in negotiations for four weeks to form a draft agreement with the European Union and International Monetary Fund, on emergency measures to save this year’s budget, as well as a structural reform plan and a list of privatisations.
The country has come under increasing pressure to receive international help in tax collection and privatisation, in exchange for €60bn to €70bn over the next two and a half years.