May 9, 2011
Standard & Poor's has again infuriated Greece by cutting the credit rating of the debt-laden country – from BB- to B – and warning that it could be slashed even further.
The agency issued the downgrade amid speculation that the €110bn (£97bn) International Monetary Fund and European Union bailout is being renegotiated, only a year after being agreed, and its expectation that investors face losses on their bond holdings.
Greece was quick to issue a statement saying that the downgrade "comes at a time when there have been no new negative developments or decisions since the last rating action by the agency just over a month ago and therefore is not justified".
In March, S&P had cut the rating to BB- and warned the country faced another downgrade if the 2010 budget or 2011 fiscal performance fell below expectations. "In fact, Greece missed its 2010 fiscal target (a budget deficit of 10.5% of GDP versus a 9.6% target) and achieving the 2011 target is uncertain," S&P said.
"We believe that many of Greece's eurozone official creditors have concluded that the ensuing higher projected borrowing requirements have reduced the likelihood that the Greek government will be able to return to commercial markets for medium- and long-term issuance later this year or early next year as originally planned. Accordingly, they may see a restructuring of official and commercial debt as the best way forward," the agency said.
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