Yet another ratings agency cut Greece’s credit rating this Monday, which did not come as too much of a surprise as the debt ridden country is on a fast track to default if a viable solution is not reached soon by the troika (EU-IMF-ECB).
Greece now has the lowest rating in the world after Standard and Poor’s downgraded its rating to CCC from a B rating, which is eight notches into junk status and four notches away from default status.
Its economic outlook rating remains negative as previous. Any debt restructuring by Greece would be considered as a default by S & P, including any bond swap, which is what Germany is recommending.
“ A restructuring of Greece’s debt, either with a bond swap or by extending maturities on existing bonds, looks increasingly likely to be imposed by European policymakers as a means of sharing the burden of Greece’s crisis with the private sector”, S&P said in a statement.
“In our view, any such transactions would likely be on terms less favourable than the debt being refinanced, which we, in turn, would view as a de facto default according to Standard and Poor’s published criteria,” the agency said.
In such an event, S&P added, “Greece’s credit rating would be lowered to “selective default,” or SD, while the ratings on the country’s debt instruments would be cut to D”.