Financial Times
June 13, 2011
Greece was downgraded close to default on Monday, sending 10-year bond yields near to fresh euro-era highs and prompting more worries over the health of the eurozone.
Standard & Poor’s cut Greece’s long-term sovereign credit rating three notches to triple C in a sign the rating agency thinks it will be forced to downgrade Athens to default 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, having fallen below Ecuador, Jamaica, Pakistan and Grenada.
S&P 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 bonds jumped over 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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