Wall Street Journal
June 13, 2011
Standard & Poor's slashed its ratings on Greece three notches, making it the firm's lowest-rated government debt in the world, citing its belief of a higher likelihood of one or more defaults over the next 12 months.
The credit-ratings firm said a "significantly higher" default risk for Greece was linked to the efforts by official creditors to close a financing shortfall created by the government's lack of access to bond-market finance. In talks over a second bailout for Greece, Germany and other euro-zone lenders are insisting that existing private-sector bondholders contribute to fill the financing gap—by agreeing to a delay in repayments—and most ways of achieving this would be considered a default by S&P.
The Greek Finance Ministry said the decision by Standard & Poor's to downgrade the country's sovereign debt is based on rumors of a default and doesn't take into account current talks for a second bailout by the European Union and the International Monetary Fund and the government's efforts to bring its debt under control.
"Standard & Poor's decision to cut the credit rating of Greece today makes reference to rumors and statements by representatives of the European Commission and European Central Bank. However, the decision ignores the intense consultations taking place currently between the same institutions and the IMF aimed at designing a viable solution that will cover the financing needs of Greece in the coming years," the ministry said.
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