Moody's downgrades Greece after debt swap

Reuters News
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Posted: Mar 02, 2012 7:04 PM
Moody's downgrades Greece after debt swap

NEW YORK (Reuters) - Moody's Investors Service on Friday cut Greece's sovereign debt rating to the lowest possible level after a debt restructuring deal that imposes hefty economic losses for private creditors.

Moody's lowered Greece's local and foreign-currency bond ratings a notch to C from Ca, becoming the third credit rating agency to downgrade the country following the announcement of the swap deal to lighten its debt burden.

Moody's said it did not assign any future outlook to the rating due to the very high likelihood of a default by the Greek government on its bonds.

"The announced debt exchange proposal," the credit rating agency said in a statement, "implies that private creditors that participate will incur substantial economic losses on their holdings of the Greek government debt".

Standard & Poor's on Monday cut Greece's long-term ratings to 'selective default', the second ratings agency to proceed with a widely expected downgrade after the country announced a bond swap plan to lighten its debt burden.

Greece formally launched the bond swap on Friday. Under the deal, bondholders will take losses of 53.5 percent on the nominal value of their Greek holdings, with actual losses put at around 74 percent.

(Reporting By Tiziana Barghini; Editing by Andrew Hay)