June 13, 2011
Standard & Poor’s, the credit ratings agency, lowered its grade on Greek debt to CCC in the latest sign that the market believes that Greece will be forced to default on its debt. The three-notch downgrade makes Greece’s debt S&P’s lowest-rated in the world, said a spokesman from the agency.
The downgrade comes at a particularly awkward time for Greece. The government is attempting to persuade legislators to accept a fresh set of austerity measures. At the same time, Germany, the dominant economy in the 17-member euro zone, is proposing that private sector bond holders accept some form of a loss on their Greek bonds as a condition for a broader rescue package for Greece that could approach 100 billion euros.
The S&P made its announcement less than two weeks after Moody’s Investor Services also lowered the country’s credit rating, putting it three notches lower to Caa1 and saying that more downgrades were possible.
While one more downgrade for Greece is unlikely to change matters much, it does put some more pressure on Germany, which has been facing pressure from the European Central Bank to not restructure Greek debt.
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