May 9, 2011
Two major credit agencies signaled their concern about Greece's massive debt on Monday, lending new credence to the view that European authorities must do more to help the country a year after it barely avoided bankruptcy with a bailout.
Experts from the European Union and the International Monetary Fund were in Greece on Monday to check up on economic reforms the government promised to make in return for euro110 billion ($160 billion) in rescue loans last year. They were also examining whether the current bailout is enough so Athens can stand on its own feet again when the loans run out in 2013 — a scenario most investors think is unlikely.
Credit rating agency Standard & Poor's cut Greece's bond grade further into junk status Monday, saying was increasingly likely that Greece would be given more time to repay its bailout loans and that Greece would negotiate a similar deal on bonds held by commercial investors.
S&P, which downgraded the long-term bonds to B from BB-, said Greece might eventually have to resort to a partial default, reneging on as much as 50 percent of its debt. As a result, the agency said it could downgrade Greece again in coming months.
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