Moody's downgrades Greek bond rating to Caa3

Sarah Spickernell
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Moody's is the third ratings agency to downgrade the country in three days (Source: Getty)
Moody's has become the third ratings agency to downgrade Greece in three days.
Today, it lowered the struggling economy's government bond rating from Caa2 to Caa3, and placed it on review for a further downgrade.
Moody's said it made the decision because of the breakdown in talks between Greece and its creditors, and the resulting uncertainty this had created around Greece's future in the Eurozone.
In a statement, it said that without ongoing support from official creditors, Greece will default on its privately-held debt:
Events of recent months have illustrated the distance between what Greece's official creditors will demand as a condition of continued support over the coming years, and what Greece's institutions are able to do to meet those demands with further meaningful economic and fiscal reforms.
It added that there were now “significant difficulties” in achieving a long-lasting agreement, and that the referendum on a fiscal agreement put forward by creditors was also cause for concern.
If Greece appears too unwilling to reach an agreement and votes “no” on Sunday, the agency may well downgrade its rating further.
A "No" vote would likely increase the risk of exit from the euro area which would impose significant losses on private sector creditors.
Over the last two days, S&P and Fitch have both downgraded their Greece ratings to CCC- and CC, respectively. They gave similar reasons for the decision.

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