Fresh debt rating cut from S&P
Ministry says decision came at a time of no new negative developments and is therefore unjustified
Standard & Poor’s downgraded Greece’s sovereign debt rating yesterday on concerns that its international creditors may have to wait longer to get their money back while European authorities admitted that Athens may get more help.
“The downgrade reflects our view of increasing sentiment among Greece’s key eurozone official creditors to extend the debt payment maturities of their 80 billion euros of bilateral loans pooled by the European Commission,” the credit rating agency said in a statement.
“As part of such an extension, we believe the eurozone creditor governments would likely seek ‘comparability of treatment’ from commercial creditors in the form of their similarly extending bond and loan maturities.”
In response to the latest downgrade, Greece’s Finance Ministry said that the decision “comes at a time when there have been no new negative developments or decisions since the last rating action by the agency just over a month ago and therefore is not justified.”
European authorities have conceded they may need to do more to help Greece with its massive debts more than a year after it was first bailed out, but robustly denied the country wants to leave the common currency.
Experts from the European Union and the International Monetary Fund are in Greece to check up on economic reforms promised in return for 110 billion euros in rescue loans last year.
They will also examine whether the current program will be enough to allow Athens to stand on its own feet again when the loans run out in 2013 – a scenario most investors think unlikely.
When asked about the possibility of addi- tional help being provided to Greece, Martin Kotthaus, spokesman for German Finance Minister Wolfgang Schaeuble, said yesterday that the latest results on the country will have to be evaluated before making any further decisions.
French Finance Minister Christine Lagarde said yesterday that last week’s meeting of European Union leaders was held to review the Greek bailout plan.
These talks “were not intended to be communicated on, they were to prepare for the finance ministers’ meeting of May 16,” Lagarde said during a meeting in Paris.