View more on these topics

Greece downgraded after bailout deal

Fitch Ratings has downgraded Greece’s credit rating to C after the country came to an agreement on the terms of a second bailout package with the international community.

Fitch Ratings has downgraded Greece’s credit rating to C after the country came to an agreement on the terms of a second bailout package with the international community.

The beleaguered nation’s long-term foreign and local currency issuer default ratings have been lowered from its previous CCC, taking it to the brink of a default rating.

The downgrade follows confirmation of Greece’s second bailout package, which includes debt restructuring that will see bondholders hit with a loss of the country’s government debt.

Creditors face a 53.5 per cent haircut on the value of Greek government bonds under the terms of the private sector involvement exchange offer. Fitch says this means an effective default by Greece is “highly likely in the near term”.

“In Fitch’s opinion, the exchange, if completed, would constitute a ’distressed debt exchange’ in line with its criteria and consequently yesterday’s announcements set in motion the agency’s process for reviewing Greece’s issuer and debt securities ratings,” the agency says.

If Greece follows through with its intentions to reduce its public debt through an exchange with private creditors, Fitch says it will issue the country with a ’Restricted Default’ rating.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. I don’t know what techniques ratings agencies use to assess and grade a country’s creditworthiness. However, I find it hard to understand how the manifestly insolvent economy of a country such as Greece that, without the injection of a further €130 Bn, would totally collapse, might qualify for any credit rating at all. Without that €130 Bn injection, Greece would be unable to redeem its next tranche of maturing government debt (€14.5 Bn), so how can it have accorded any sort of credit rating ~ it’s already on the other side of no tomorrow. How can a country’s credit rating be downgraded from nil?

  2. BREAKING NEWS

    The top three credit agencies Standard and Poor’s, Moody’s and Fitch have all been downgraded!!!

    I’m only joking but wouldn’t that be a surprise as they talk so much rubbish and have way too much power.

Leave a comment