Well, this is a surprise.
Standard & Poor's has lowered Greece's credit rating one notch to CCC and said it could be lowered again within the next year as the country's financial situation worsens.
Although normally S&P would be restricted from altering its rating of Greece outside a “pre-established calendar”, the agency said its delay in making a scheduled €300m payment to the IMF on June 5 had negated the usual limits.
“As its liquidity position continues to deteriorate, Greece appears to be prioritizing other spending items over debt servicing,” S&P said. “In our view, without a turnaround in the trajectory of nominal GDP and deep public-sector reform, Greece’s debt is unsustainable.
“The downgrade reflects our view that in the absence of an agreement with its official creditors, Greece will likely default on its commercial debt within the next 12 months.”
It added: “A weakening underlying fiscal position raises questions about the realism of any agreement with Greece’s creditors on fiscal targets, as projections for tax receipts and real and nominal GDP appear speculative. Even if an agreement with official creditors were to be reached over the next fortnight, we do not expect that such an agreement would cover Greece’s debt service requirements beyond September.”
S&P also has some news for everyone on Greece watch: it doesn't expect there to be any official debt relief or financing agreed in the next few days.
Further downgrades could happen “if we perceive that the likelihood of a distressed exchange of Greece's commercial debt will increase further”.