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Downgrade sparks anger
Street protest pending amid EU-IMF-backed austerity measures
Jun 16, 2010
ATHENS - EURO zone officials on Tuesday denounced a sharp debt downgrade for Greece where officials insisted an EU-IMF-backed recovery plan was bearing fruit as they braced for street protests against austerity measures.
The move by ratings agency Moody's on Monday to cut Greek debt to junk status came as auditors from the EU and the IMF scrutinised claims by Greece that it was ahead of target in fighting its debt mountain and public deficit.
Olli Rehn, the EU's top economic commissioner, told the European parliament the Moody's decision was 'surprising and highly unfortunate' and said it raised questions about the role of ratings agencies in the financial system.
Jean-Claude Juncker, head of the euro zone finance ministers' group, called the move 'irrational,' notably in light of substantial support for Greece from the European Union and the International Monetary Fund. 'I am totally convinced that ... a few months from now, the financial markets will see that they were wrong. They're misinterpreting the decisions which have been taken,' he said.
Moody's said that considerable uncertainty about Greek plans, even with the help of a 110-billion-euro (S$188.5 billion) EU-IMF bailout package, to correct public finances justified the ratings cut. 'This uncertainty represents a risk that leads Moody's to believe that Greece's creditworthiness is now consistent with a Ba1 rating, a rating which incorporates a greater, albeit, low risk of default,' it said.
The downgrade, from a rating of A3, means some investors will no longer be allowed to buy Greek debt under terms of their investment mandate and could lead to still higher borrowing costs for Athens if it goes to the markets for cash. -- AFP
Street protest pending amid EU-IMF-backed austerity measures
Jun 16, 2010
ATHENS - EURO zone officials on Tuesday denounced a sharp debt downgrade for Greece where officials insisted an EU-IMF-backed recovery plan was bearing fruit as they braced for street protests against austerity measures.
The move by ratings agency Moody's on Monday to cut Greek debt to junk status came as auditors from the EU and the IMF scrutinised claims by Greece that it was ahead of target in fighting its debt mountain and public deficit.
Olli Rehn, the EU's top economic commissioner, told the European parliament the Moody's decision was 'surprising and highly unfortunate' and said it raised questions about the role of ratings agencies in the financial system.
Jean-Claude Juncker, head of the euro zone finance ministers' group, called the move 'irrational,' notably in light of substantial support for Greece from the European Union and the International Monetary Fund. 'I am totally convinced that ... a few months from now, the financial markets will see that they were wrong. They're misinterpreting the decisions which have been taken,' he said.
Moody's said that considerable uncertainty about Greek plans, even with the help of a 110-billion-euro (S$188.5 billion) EU-IMF bailout package, to correct public finances justified the ratings cut. 'This uncertainty represents a risk that leads Moody's to believe that Greece's creditworthiness is now consistent with a Ba1 rating, a rating which incorporates a greater, albeit, low risk of default,' it said.
The downgrade, from a rating of A3, means some investors will no longer be allowed to buy Greek debt under terms of their investment mandate and could lead to still higher borrowing costs for Athens if it goes to the markets for cash. -- AFP
