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Moody’s Downgrades Greece to Lowest Rating on Bond Scale

Moodys Downgrades Greece Bond RatingATHENS, Greece (The Blaze/AP) — The ratings agency Moody’s downgraded Greece to the lowest rating on its bond scale late Friday, following a deal with private investors that would see them ultimately lose an estimated 70 percent of their holdings in Greek debt.

Moody‘s lowered Greece’s sovereign rating to C from Ca, arguing that the risk of default remains high even a bond-swap deal with banks and other private investors, due to be completed this month, is successful.

(Related: Glenn Beck Presents Documentary: ‘Six Hours in Greece’)

It said it would “re-assess the credit risk profile” after Greece issues the new bonds.

Ratings agency Standard & Poor’s took similar action on Feb. 27.

The swap deal aims to cut euro107 billion ($144 billion) from the country’s debt, and would see private investors lose more than half the face value of their Greek bonds in exchange for new ones issued with more favorable repayment terms for the crisis-hit country.

The exchange is an integral part of a second bailout package for Greece by other eurozone countries and the International Monetary Fund.

“Looking ahead, the EU program and proposed debt exchanges will reduce Greece’s debt burden, but the risk of a default even after the debt exchange has been completed remains high,” Moody’s said.

“Moody’s believes that Greece will still face medium-term solvency challenges: its stock of debt will still be well in excess of 100 percent of gross domestic product for many years, the country is unlikely to be able to access the private market once the second assistance package runs out, and its planned fiscal and economic reforms will still face very significant implementation risks.”

Greece has been relying since May 2010 on rescue loans from eurozone partners and the IMF. But despite receiving euro73 billion from its initial euro110 billion bailout and pushing through tough austerity measures in return, the country has consistently missed its reform targets.

To limit a threat to Europe’s single currency, its leaders have agreed to extend the country a second bailout, this time worth euro130 billion ($172 billion), which is accompanied by the debt reduction deal.

So far, the eurozone has agreed in principle to release the first batch of bailout loans to Greece to finance the bond-swap, with the final green light to due till come next week.

But harsh austerity has pushed the country into a fifth year of recession and seen the unemployment rate reach nearly 21 percent.

Earlier Friday, provisional figures from the finance ministry figures showed Greece posting a deficit in January of euro490 million ($652 million), in contrast to last year’s equivalent surplus of euro154 million.

The ministry’s General Accounting Office said revenues during the month were hit by the expiry of a one-off business tax, as well as reduced revenues from consumption.

Revenues in January totaled euro4.87 billion ($6.48 billion). Though a little bit better than the government’s latest target, it‘s markedly worse than last year’s equivalent of euro5.12 billion.

Comments (16)

  • Craig23
    Posted on March 5, 2012 at 3:29am

    Well, in fact, there is a crucial difference between Greece and America. Greece is most at threat of defaulting in view of the fact that its finances have deteriorated so much it cannot raise any more money at reasonable rates on the commercial debt market. In comparison, the United States now still enjoy very cheap borrowing rates, and can easily borrow more over the medium term. However, it could be forced to default if the Congress does not increase the statutory debt ceiling by about August 2. And I support Republicans in Congress who are refusing Obama’s entreaties to raise the ceiling unless they can get a deficit reduction plan that meets their standard of all spending cuts and no tax increases. The problem is described in more details at: http://cashadvancesus.com/obama%E2%80%99s-tax-plans/

    Report Post »  
  • gpk
    Posted on March 4, 2012 at 7:39am

    California getting ready to belly-up. Agree with the poster above. Be prepared. Food, ammo, water etc. Tick……tock.

    Report Post »  
  • long live tea
    Posted on March 3, 2012 at 5:35pm

    Obama says,” looks great give them billions . As long as it comes from your kids and grandkids Pockets cause i have no money.I need a break, Lets go on vacation”.

    Report Post »  
  • izukiddin
    Posted on March 3, 2012 at 3:43pm

    Boy, I‘ll bet that Moody’s bond rating really means something to these idiotic people.

    Report Post »  
  • isobamamadd
    Posted on March 3, 2012 at 2:44pm

    Has anyone ever told them about the Fractional Reserve system. If someone would there would be some Bankers asking for a ride to the Space Station..

    Report Post »  
    • carbonyes
      Posted on March 4, 2012 at 4:36am

      And they would be requesting a one way ticket, because they would be dead on arrival if they returned, as the people of the USA would make it a slow death by skinning them alive.

      Report Post »  
  • TRILO
    Posted on March 3, 2012 at 10:35am

    But the International Swaps and Derivatives Association (ISDA) said this was not a default so all of those dangerous credit defaut swaps were not triggered. If those were triggered the house of cards would have come falling down immediately. I wonder what Monday will bring.

    I always thought that if you could not pay back all of what you owe than you were in default and bankrupt. Now it appears that you do not have to pay back 70% of what you owe and you are not in default. I wonder if I can call my bank and tell them that I am not going to pay back 70% of my outstanding loan and they can not consider me in default. Hey if Greece can do it and the banks accept it why can’t I?

    I guess Bill Clinton was right, it just depends on what the word “is” really is. The world has gone completely mad.

    Report Post » TRILO  
    • Boojer56
      Posted on March 3, 2012 at 1:14pm

      so if iwere greek I only have to pay 70% of my car payment? try paying 70 percent of your car payment here and see howlong it takes before a tow truck shows up

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    • carbonyes
      Posted on March 4, 2012 at 5:10am

      Not only are these people insane, but inane as well. They are living in the Never, Never Land of Peter Pan, Tinker Bell and Captain Hook. The problem is they are about to get the Hook, and they are not going to like the size of the Hook or the mortal impact when it rips their chests wide open. Their feigned immortality is about to catch up with them. When peoples’ lives are treated with no respect or concern, but are simply ponds in their game, the chickens will indeed come home to roost, but instead of chickens, it will be vultures picking apart the master planners. they will not be able to run fast enough or far enough, and there are not enough spaces available on the shuttle to the space station. They could opt for a flight to the moon, but when their air supply runs out, they will be SOL, but then that might be a fitting end for them – in memorial, floating in space. Probably better than being skinned alive down here, but then the EPA, if they are still around, would complain about the polluting of the moons atmosphere – what there is of it.

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  • Gonzo
    Posted on March 3, 2012 at 8:46am

    Obama’s dream for America.

    Report Post » Gonzo  
    • carbonyes
      Posted on March 4, 2012 at 4:54am

      It it may be his death warrant, if not naturally, at least figuratively speaking, for not has he done anything to either stem or reverse the tide, but his policies, programs and initiatives have accelerated the downward slide towards the precipice.

      Would say I wouldn’t want to be in his shoes, but even a trained monkey could do a better job in making positive, common sense decisions that would put us on the path to stemming the tide and at some point reversing the decline – that in spite of the fact that we have not hit bottom, nor is it visible from our vantage point.

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  • CROCK-HANDLER
    Posted on March 3, 2012 at 5:31am

    And so the dominos begin to fall.

    Report Post »  
  • Proud Stray Dog
    Posted on March 3, 2012 at 3:31am

    Mighty funny they waited until after the NYSE closed. Look out for Monday. Going to be a bumpy ride.

    Report Post » Proud Stray Dog  
  • wntsmallgov
    Posted on March 3, 2012 at 12:10am

    It has started people. Buy Weapons, Food, Ammo, Stockpile water and silver or gold. Do not buy from the big firms. Easier yes but it is also eaiser for the government to use the 1933 law to take what is legally is yours.
    Yes DHS we know about the law and we know that the government will use it on us.

    Report Post » wntsmallgov  
  • SilentReader
    Posted on March 2, 2012 at 10:21pm

    This is your chance to get out of the E.U. Greece. Do it now. And then model yourself after Iceland who was the first to experience financial problems and got out of it!

    The corrupt fascist and Nazi-founded E.U. will collapse soon under it’s own weight! And, I for one, can’t wait to see it happen!

    Report Post » SilentReader  
    • lukerw
      Posted on March 3, 2012 at 7:34am

      That EU Model… is the Dream of Progressives & Socialists for America… which has been implemented here!

      Report Post » lukerw  

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