Wall Street Journal
May 20, 2011
Fitch Ratings downgraded Greece's credit ratings three notches, citing the scale of the country's challenge in securing solvency.
The move came as yields on peripheral euro-zone government bonds rose Friday and investors bought safe-haven German government bonds as concerns about a possible restructuring of Greek debt and the impact of this weekend's Spanish elections weighed on market sentiment.
The ratings firm lowered the ratings to B+, four steps below investment grade, from BB+ and placed them on watch for further cuts.
The Wall Street Journal reported Friday that the European Central Bank warned it may pull the plug on funding for Greek banks in the event of any restructuring of Greece's government debt, escalating what until now had been a behind-the-scenes dispute with euro-zone governments over the best way to handle Athens' fiscal crisis.
Fitch anticipates that substantial new money will be provided to Greece by the European Commission and International Monetary Fund, and that Greek sovereign bonds won't be subject to a soft restructuring or re-profiling that would trigger a credit event and default rating.
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