July 14, 2011
Greece’s credit rating was cut three levels to Fitch Ratings’ lowest grade for any country in the world as the company followed rivals and said that a default is a “real possibility.”
The move to CCC from B+ “reflects the absence of a new, fully funded and credible” program by the International Monetary Fund and the European Union, the ratings company said yesterday in a statement in London. It also reflects “heightened uncertainty surrounding the role of private creditors in any future funding, as well as Greece’s weakening macroeconomic outlook.”
Fitch is the third ratings company to cut Greece to the bottom tier of its rankings, reflecting concerns that a new aid package being negotiated for the nation will inflict losses on investors. Greece was downgraded to Caa1 by Moody’s Investors Service on June 1 and CCC by Standard & Poor’s on June 13.
“We’re so far past the stage with Greece where ratings themselves make a difference because they’re all so low,” said Vincent Truglia, managing director of economic research at New York-based Granite Springs Asset Management LLP and a former head of the sovereign risk unit at Moody’s. “What’s more important is what the effects will be when Greek debt is essentially rescheduled and the effect on the periphery.”
In its statement, Fitch said that it has taken Greece off Ratings Watch Negative.
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