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Saturday 21 April 2018

Greece close to default rating

EMBATTLED Greece is now the lowest-rated sovereign in the world after ratings agency Standard & Poor's downgraded the country close to default.

Yields on its 10-year bonds soared close to new highs and sparked fresh fears of a eurozone debt crisis.

S&P cut Greece's long-term sovereign credit rating by three notches to triple C, a sign the rating agency thinks it will be forced to downgrade Athens to default - D.

Private creditors are likely to be involved in the next bailout of the country, which is now rated below Ecuador, Jamaica, Pakistan and Grenada.

"In our view, Greece is increasingly likely to restructure its debt in a manner that, under the conditions of any package of additional funding provided by Greece's official creditors, would result in one or more defaults under our criteria," the agency said.

S&P blamed the war of words between Germany and the European Central Bank, as well as Greece's finances, for the cut.

Greek 10-year bond yields jumped to more than 17pc for the second time this year, before closing at 16.97pc in response to the S&P move, which puts Athens only four notches above default.

Portuguese and Irish 10-year bond yields closed at euro-era highs of 10.66pc and 11.34pc respectively.

Separately, the board of the IMF said in a statement that it would consider the candidacies of Christine Lagarde, the finance minister of France, and Agustin G. Carstens, the governor of the Mexican central bank for the head of the agency.

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