Greece debt rating downgraded again
Greece's debt rating has been downgraded even further below junk status by a credit rating agency amid fears that the bailed-out eurozone country will end up having to restructure its massive debts.
Moody's Investor Services said that it is lowering its rating by three notches to B1 from BA1, citing three main reasons for the downgrade.
As well as warning of major implementation risks associated with the government's economic programme, Moody's noted the considerable difficulties Greece has in raising revenues and highlighted the risk of more onerous conditions when the current bailout package ends in 2013.
Greece was saved from effective bankruptcy last May after accepting a €110bn bailout from partners in the EU and the International Monetary Fund.
The Greek government said Moody's downgrade is "completely unjustified" and "does not reflect an objective and balanced assessment of the conditions Greece is presently facing".
"Ultimately, Moody's downgrading of Greece's debt reveals more about the misaligned incentives and the lack of accountability of credit rating agencies than the genuine state or prospects of the Greek economy," it said.
As well as warning that the government's economic programme may not yield the intended drop in debt and return to growth, Moody's noted the considerable difficulties Greece has in raising revenues, adding: "Moreover, the risk of a post-2013 restructuring might lead the Greek authorities and investors to participate in a voluntary distressed exchange before that time."
The Greek finance ministry queried the timing and the multi-notch nature of the downgrade, describing them as "incomprehensible".
It added that Moody's analysis fails to properly take into account the "upside impact" on the economy from the government's fiscal consolidation and structural reforms programme.
Moody's main rivals, Standard&Poor's and Fitch Ratings, rate Greece slightly higher at BB+ though S&P has recently warned that it may lower its view soon.