Business

S&P makes Greece its least credit-worthy country

  • 13 June 2011
  • From the section Business
Protester in Athens on 13 June
Unions have called a general strike for Wednesday

Standard & Poor's has cut Greece's credit rating, making it its least credit-worthy country.

The ratings agency cut Greece three notches from B to CCC and said the country was likely to default on its debts at least once by 2013.

The Greek government said the downgrade ignored its efforts to secure funding.

It has been trying to push through fresh austerity measures as part of the conditions for the EU and IMF's 110bn euro ($159bn; £97bn) bail-out package.

The package will be debated in parliament later this week, with unions planning a general strike for Wednesday.

'Viable solution'

Meanwhile, European banks are negotiating a deal under which they will buy new Greek bonds to replace the ones they have that are maturing.

S&P said it was likely that the EU would impose a restructuring of Greece's debt, which it would treat as a default because it would probably be on less favourable terms for the lenders.

In a statement, the Greek Ministry of Finance said, "The decision ignores the intense consultations taking place currently between the same institutions and the IMF aimed at designing a viable solution that will cover the financing needs of Greece in the coming years."

Banks such as Credit Agricole have come out in favour of extending their Greek debt, which would be a key part of a second bail-out of Greece, designed to give it more time to sort out its debts.

EU leaders are due to discuss a new deal at a summit on 23 June.

The Greek government has decided to raise taxes and cut spending more than expected this year as it battles to avoid a default.

There have been weeks of protests in Athens and opposition parties have rejected the government's attempts to secure cross-party support.

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