Moody’s Cuts Greece Credit Rating, Warns On Default

A leading ratings agency has lowered its credit rating for Greek sovereign debt and increased its view of the likelihood of a potential default, according to Bloomberg.

A leading ratings agency has lowered its credit rating for Greek sovereign debt and increased its view of the likelihood of a potential default, according to Bloomberg. On Thursday, Moody’s Investors Services downgraded its credit rating for Greece by three notches to Caa1 from B1. The group also warned that it estimates the risk of a Greek sovereign default as being at 50%. Moody’s cited a funding gap of €30 billion of bonds next year along with 10-year borrowing costs above 16%, stating, “Taken together, these risks imply at least an even chance of default.”

The warning comes as European leaders meet to extend the European Union and International Monetary Fund aid package for the country in order to avoid a default. Moody’s included in its report a summary of data that shows half of all Caa1 rated country and institutions failing to meet debt payments, but Greek leaders said that the downgrade “overlooks” the country’s commitment to meeting fiscal targets, citing “significant” achievements in meeting goals so far. Win Thin of Brown Brothers Harriman & Co said Greece could face a tough decision down the road if a enhanced bailout package is not agreed upon, “default or leave the eurozone.”

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