Standard & Poor΄s Ratings Services said on Tuesday it lowered its long-term sovereign credit rating on Greece to ΄BB-΄ from ΄BB+΄ and maintained the rating on CreditWatch with negative implications.
At the same time, the rating agency placed its ΄B΄ short-term sovereign credit rating on Greece on CreditWatch with negative implications.
The agency said the cut followed the concluding statement of last week΄s European Union summit, which confirmed expectations that sovereign-debt restructuring may be a potential prerequisite for borrowing from the European Stability Mechanism.
The decision by ratings agency Standard & Poor’s Corp. to further cut Greece’s credit rating doesn’t reflect the efforts the country has made to fix its public finances, Prime Minister George Papandreou said Tuesday, adding that Greece hoped to return to the financial markets as soon as possible.
Speaking to journalists, Papandreou said the S&P decision was mainly a critique of a weekend decision by European leaders to create a permanent bailout mechanism for troubled euro-zone countries–but which also sees possible losses for private bond holders in the future.
“The S&P downgrade, is not because of what Greece is doing. It is very interesting to see what they are saying. What they are saying is that the decisions of the European Union were not enough, or were in the wrong direction,” Papandreou said.
He added that Greece has “proven” it could reduce its deficit after narrowing the country’s budget gap by roughly a third in the past year.
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