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October 28, 2020
BUSINESS

Moody’s downgrades Greece to the lowest rating

The ratings agency Moody’s downgraded Greece to the lowest rating on its bond scale late Friday, following a deal with private investors that would see them ultimately lose an estimated 70 percent of their holdings in Greek debt, according to palmbeachpost.com. Moody’s lowered Greece’s sovereign rating to C from Ca, arguing that the risk of default remains high even a bond-swap deal with banks and other private investors, due to be completed this month, is successful. It said it would “re-assess the credit risk profile” after Greece issues the new bonds. Ratings agency Standard & Poor’s took similar action on Feb. 27. The swap deal aims to cut EUR 107 bln 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.”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.”

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