Greece goes further into junk territory

Financial Times
June 1, 2011

The pressure mounted on Greece on Wednesday night when Moody’s cut its credit rating by three notches to Caa1 from B1 and maintained its negative outlook.

The ratings agency cited a growing risk that the European periphery economy would fail to stabilise its debt position without a restructuring.

Greece responded by saying Moody’s was not taking into account Athens’ efforts to put the country’s finances on an even keel.

“[This downgrade) is influenced by intense rumour in the media and overlooks the Greek government’s pledges to achieve its fiscal targets for 2011 and to accelerate privatisations,” the Greek finance ministry said in a statement.

Earlier on Wednesday the European Central Bank had backed the idea of encouraging banks to roll-over Greek bonds as a way of helping the country out of its financial plight.

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