Greek rating now worst in the world

Financial Times
June 13, 2011

Greece was downgraded close to default on Monday, sending yields on its 10-year bonds near to fresh euro-era highs and stoking fears over the eurozone debt crisis.

Standard & Poor’s cut Greece’s long-term sovereign credit rating by three notches to triple C, a sign the rating agency thinks it will be forced to downgrade Athens to default – or D – as private creditors are likely to be involved in the country’s next bail-out.

Greece is now the lowest-rated sovereign in the world, below Ecuador, Jamaica, Pakistan and Grenada. The agency said: “In our view, Greece is increasingly likely to restructure its debt in a manner that, under the conditions of any package of additional funding provided by Greece’s official creditors, would result in one or more defaults under our criteria.”

Greek 10-year bond yields jumped to more than 17 per cent for the second time this year, before closing at 16.97 per cent in response to the S&P move, which puts Athens only four notches above default.

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