Greece debt rating cut further by Moody's

BBC News
March 7, 2011

Moody's has downgraded Greece's debt to "highly speculative" prompting an angry response from the finance ministry.

Greek bonds fell after the rating agency cut its rating from Ba1 to B1.

Moody's cited "endemic tax evasion", "very ambitious" austerity plans, and the possibility that the EU may force a debt restructuring on Greece after 2013 as reasons for its decision.

Greece's finance ministry said the move was "incomprehensible" and called for tighter regulation of rating agencies.

"Ultimately, Moody's downgrading of Greece's debts 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," said the Greek finance ministry in a statement.

"Having completely missed the build-up of risk that led to the global financial crisis in 2008, the rating agencies are now competing with each other to be the first to identify risks that will lead to the next crisis."

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