Monday, March 7, 2011

European Woes Escalate Again: Greece Now Downgraded to "Highly Speculative"

The Moody's rating agency has done it again and cut Greece's credit rating, by a full three notches (!), from  B1 from Ba1,. The agency also said it may cut further (hw many levels lower than that are there?) due to "significant risks to the government's fiscal consolidation program from a revenue shortfall and difficulties in reforming healthcare and state-owned companies".

Sarah Carlson, Moody's lead analyst on Greece, saays:  "The sheer magnitude of the task becomes ever more apparent,"

"There is a risk that conditions attached to any kind of continuing support after 2013 could take solvency criteria into account that the country may not be able to satisfy, and therefore could result in a restructuring of existing debt,"

Moody is just the first agency to do so. The Greek government is very angry.  Finance Ministry said Moody's had ignored "progress in implementing its fiscal consolidation plan", including "an improvement in revenue collection".

"The rating downgrade announced by Moody's today is completely unjustified,"

According to the Greek Finance Ministry that is. Moody's is just telling it as it is.

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