GREECE BECAME the lowest-rated country in the world in the rankings of Standard Poor’s yesterday, putting it below Ecuador, Jamaica, Pakistan and Grenada.
The rating agency cut Greece three notches and warned it would view a likely debt restructuring as a default.
This was the latest blow for the country’s Socialist government, which is scrambling to push a new austerity package through parliament to clinch continued funding under a year-old bailout plan despite rising public discontent.
Barely a year after Athens was granted a first €110 billion aid package, the EU, the IMF and the European Central Bank are working on a second funding deal.
Meanwhile, European banks holding Greek debt appear to be moving towards agreement on buying new bonds to replace those they hold that reach maturity.
SP said EU leaders looked more likely to impose a restructuring of Greece’s debt – either via a bond swap or by extending bond maturities – as a means of having the private holders of Greek bonds share the burden. “In our view, any such transactions would likely be on terms less favourable than the debt being refinanced, which we, in turn, would view as a de facto default,” the agency said.
