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.”