Friday, January 14, 2011

Fitch Downgrades Greece to Junk Status

Fitch has downgraded Greece to BB+ from BBB-.

"The downgrade acknowledges that while Greek economic and fiscal performance under the EU-IMF programme has in may respects exceeded expectations, its heavy public debt burden renders fiscal solvency highly vulnerable to adverse shocks. Moreover, despite the significant progress made in reducing the budget deficit in 2010 – by 6% of GDP despite a severe recession – the fiscal consolidation effort will still have to be sustained over several years to firmly anchor confidence in Greek sovereign creditworthiness.

The negative outlook reflects that public debt sustainability is still very fragile and renewed access to market financing uncertain. Failure of the economy to rebalance and emerge from recession would place further downward pressure on Greek ratings".

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