Greece Rating Cut Three Notches to 'B1' at Moody's
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Moody's Investors Service cut Greece's credit rating by three notches citing the rising risk of defaults, a move that cause the Greek Finance Ministry sees as "completely unjustified."
The credit rating for Greece was dropped to 'B1' from 'Ba1, as the ratings agency sees increased concerns that the lagging tax collection and risks of implementing monetary policy will make it more difficult for the nation's government to reach the $110 billion-euro ($154 billion) goal for cost-cutting conditions.
“The risk has materially increased of a default event,” said Sarah Carlson, Moody’s senior analyst. “Our central view is that the Greek government will achieve its objectives and it won’t need to impose losses on credits, but there are material risks to that outcome.”
The Finance Ministry in Greece refuted the decision by Moody's, arguing that the multi-level drop coming weeks before the leaders of the European Union is set to decide on new bailout measures that could impact the terms of the aid given to Greece. The government called the move "incomprehensible."
“Moody’s downgrading of Greece’s debt reveals more about the misaligned incentives and the lack of accountability of credit-rating agencies than the genuine state or prospects of the Greek economy,” the Greek Finance Ministry said. “Having completely missed the build-up of risk that led to the global financial crisis in 2008, the rating agencies are now competing with each other to be the first to identify risks that will lead to the next crisis.”
Moody's retorted this by saying that any decision by EU leaders this month will not significantly affect the long-term prospects of Greece.
“We did consider a range of likely outcomes, but really our concern is much more long term,” Carlson said. “Whatever decisions are taken at the end of month are not something that would change our long-term outlook.”
The credit rating for Greece was dropped to 'B1' from 'Ba1, as the ratings agency sees increased concerns that the lagging tax collection and risks of implementing monetary policy will make it more difficult for the nation's government to reach the $110 billion-euro ($154 billion) goal for cost-cutting conditions.
“The risk has materially increased of a default event,” said Sarah Carlson, Moody’s senior analyst. “Our central view is that the Greek government will achieve its objectives and it won’t need to impose losses on credits, but there are material risks to that outcome.”
The Finance Ministry in Greece refuted the decision by Moody's, arguing that the multi-level drop coming weeks before the leaders of the European Union is set to decide on new bailout measures that could impact the terms of the aid given to Greece. The government called the move "incomprehensible."
“Moody’s downgrading of Greece’s debt reveals more about the misaligned incentives and the lack of accountability of credit-rating agencies than the genuine state or prospects of the Greek economy,” the Greek Finance Ministry said. “Having completely missed the build-up of risk that led to the global financial crisis in 2008, the rating agencies are now competing with each other to be the first to identify risks that will lead to the next crisis.”
Moody's retorted this by saying that any decision by EU leaders this month will not significantly affect the long-term prospects of Greece.
“We did consider a range of likely outcomes, but really our concern is much more long term,” Carlson said. “Whatever decisions are taken at the end of month are not something that would change our long-term outlook.”
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