The Street
March 7, 2011
The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
The three-notch downgrade of Greece from Ba1 to B1 by Moody's was a bit surprising, even to jaded followers of rating agency behavior.
While we have remained negative on the country, is it really as bad off as Mongolia, Sri Lanka, Belarus, Lebanon, Vietnam, Bolivia, and Paraguay (all rated B1 by Moody's)?
Clearly, we are seeing some overshoot to the downside, which we have long warned about as rating agencies try to win back some credibility. In light of today's action and last week's warning by Fitch of a potential Spain downgrade, we thought it would be helpful to summarize our ratings outlook for the euro zone.
To us, the interesting thing is that FX markets have basically shrugged of these recent ratings moves. Bond markets have not, however, and yields in the periphery continue to reflect significant restructuring risk for many sovereign issuers. Please note that we are in the process of our quarterly ratings update, and that fresh scores will be available toward the end of this month.
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