S&P warns it could downgrade Greece in three months time
STANDARD & Poor’s yesterday warned it could cut Greece’s BB-plus credit rating if it becomes clear that the proposed European Stability Mechanism will favor public creditors to the detriment of private bond holders.
Greece, as a potential recipient of European Stability Mechanism (ESM) funding, could have its ratings negatively affected by the new rules, S&P said, echoing a warning it issued earlier this week regarding Portugal’s ratings. “We believe that assigning ‘preferred creditor’ status to future official lending via the ESM could be detrimental to the ability of non-official holders of sovereign debt to be repaid,” S&P said in a statement.
S&P said it will await details of the plan to make its decision, which shouldn’t take longer than three months.