July 25, 2011
Ratings agency Moody’s has cut Greece’s debt rating by three notches to Ca on Monday, leaving it just one notch above what is considered default, and said the chance of a default is now “virtually 100%”.
The ratings agency warned that last week’s bailout package agreed by eurozone leaders will make it easier for Greece to reduce its debt, but the country still faced medium-term solvency challenges and there were significant risks in implementing the required reforms.
“The announced EU programme implies that the probability of a distressed exchange, and hence a default, on Greek government bonds is virtually 100%,” the agency said.
“[Greece’s] stock of debt will still be well in excess of 100% of GDP for many years and it will still face very significant implementation risks to fiscal and economic reform,” it added.