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Standard&Poor’s: Greece on the threshold of default

14 June 2011 09:00 (UTC +04:00)

Baku â€“ APA-Economics. Greece was downgraded close to default on Monday, sending yields on its 10-year bonds near to fresh euro-era highs and stoking fears over the eurozone debt crisis, Financial Times reported.

Standard & Poorâ€™s cut Greeceâ€™s long-term sovereign credit rating by three notches to triple C, a sign the rating agency thinks it will be forced to downgrade Athens to default â€“ or D â€“ as private creditors are likely to be involved in the countryâ€™s next bail-out.

Greece is now the lowest-rated sovereign in the world, below Ecuador, Jamaica, Pakistan and Grenada. The agency said: â€œIn our view, Greece is increasingly likely to restructure its debt in a manner that, under the conditions of any package of additional funding provided by Greeceâ€™s official creditors, would result in one or more defaults under our criteria.â€

The S&P move comes as more problems emerged over the second rescue package for Greece. The deal, worth â‚¬172bn according to EU officials, is being held up by a dispute, chiefly between Germany and the European Central Bank, about whether to restructure Greek debt, which the ECB strongly opposes. Eurozone finance ministers will try to bridge the divide between Berlin and the ECB at a meeting in Brussels on Tuesday, although no breakthrough is expected. Senior officials believe the German government is more likely to give ground than the ECB.

The Greeks hit back at Standard & Poorâ€™s move, saying the decision overlooked intense deliberations at the European Union and International Monetary Fund to find a viable solution to its debt crisis.