Moody’s Cuts Greece’s Debt to Junk

Moody’s Investors Service (MCO) on Monday downgraded Greece’s sovereign debt rating by four notches to junk status. The ratings agency downgraded the government bond ratings of the debt-ridden Mediterranean country to Ba1 from A3 and said the move reflects its analysis of the joint EU/IMFrescue package.

FT: “The Ba1 rating reflects our analysis of the balance of the strengths and risks associated with the Eurozone/IMF support package. The package effectively eliminates any near-term risk of a liquidity-driven default and encourages the implementation of a credible, feasible, and incentive-compatible set of structural reforms, which have a high likelihood of stabilizing debt service requirements at manageable levels,” said Sarah Carlson, Moody’s Vice President-Senior Analyst. “Nevertheless, the macroeconomic and implementation risks associated with the program are substantial and more consistent with a Ba1 rating,” she added.

Moody’s also downgraded Greece’s short-term issuer rating to “Not-Prime” from “Prime.”

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