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Moody’s downgrades Greece again to lowest rating despite debt deal

 A man reads a sign at a closed metro station informs for the 24-hour strike held by drivers of metro, tram and urban railway in Athens, Thursday, Mar...

Greece Financial Crisis

A man reads a sign at a closed metro station informs for the 24-hour strike held by drivers of metro, tram and urban railway in Athens, Thursday, Mar...

Greece’s credit ratings were cut from “Ca” to “C” by Moody’s Investors Service on Friday after the recently negotiated debt restructuring.

The swap deal aims to cut €107 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.

The country faces a high risk of default even if the plan is successful, Moody’s said. It will be unlikely to be able to sell bonds to private investors once its bailout package runs out, according to the rating company.

“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.”

The deal constitutes “a distressed exchange, and hence a default,” the New York-based rating company said.

The downgrade follows S&P’s decision on Feb 27 to lower Greece to “selective default” after the announcement of the plan for investors to trade their bonds for new securities.


Updated : 2021-06-23 01:53 GMT+08:00