Fitch rating agency cut Greece’s rating by three notches to B+, pushing the country’s status into deeper junk territory.
This is comparable to other ratings agencies, where Standard and Poor’s gave a B rating and Moody’s gave a B1 grade. All three agencies have warned of further downgrades if the Greek debt issue isn’t resolved soon.
Pressure is on the IMF and the EU to face the challenge now to finally come up with a credible plan that will structurally reform the debt-ridden country.
“The rating downgrade reflects the scale of the challenge facing Greece in implementing a radical fiscal and structural reform programme necessary to secure solvency of the state and the foundations for sustained economic recovery,” Fitch said in a statement.
The agency later added that “In the absence of a fully funded and credible EU/IMF programme, the rating would likely fall into the ‘CCC’ category indicating that a Greek sovereign debt default was highly likely,”
With current plans, Greece is expected to return to markets by May 2013 when its 110 billion joint aid deal from the IMF and EU will expire. However, Senior Director at Fitch, Paul Rawkins is not confident that Greece will be able to meet the targets set.