interestrateripoff Posted June 1, 2011 Share Posted June 1, 2011 http://www.zerohedge.com/article/moodys-downgrades-greece-just-few-notches-above-default-b1-caa1-outlook-negative Next up: Greece begins criminal proceedings against the rating agency for character defamantion and liber (or is that slander?). Also, Belgium is next. Yet most importantly, there is no mention in the downgrade if the "Vienna plan" currently contemplated, or the latest zany "debt rolling" proposal constitutes an Event Of Default, meaning the market will have even more uncertaintly to grapple with.Moody's downgrades Greece to Caa1 from B1, negative outlook Moody's Investors Service has today downgraded Greece's local and foreign currency bond ratings to Caa1 from B1, and assigned a negative outlook to the ratings. The rating action concludes the review for possible downgrade that the rating agency initiated on 9 May 2011. The main triggers for today's downgrade are as follows: 1. The increased risk that Greece will fail to stabilise its debt position, without a debt restructuring, in light of (1) the ever-increasing scale of the implementation challenges facing the government, (2) the country's highly uncertain growth prospects and (3) a track record of underperformance against budget consolidation targets. 2. The increased likelihood that Greece's supporters (the IMF, ECB and the EU Commission, together known as the "Troika") will, at some point in the future, require the participation of private creditors in a debt restructuring as a precondition for funding support. Taken together, these risks imply at least an even chance of default over the rating horizon. Moody's points out that, over five-year investment horizons, around 50% of Caa1-rated sovereigns, non-financial corporate and financial institutions have consistently met their debt service requirements on a timely basis, while around 50% have defaulted. Greece's Caa1 rating incorporates Moody's assumption that current negotiations between the Greek government and the Troika will result in further official support for the Greek government and the announcement of additional austerity and structural reform measures. The negative outlook on the Caa1 rating reflects Moody's view that the country's very large debt burden, the significant implementation risks in its structural reform package, and the country's ongoing need for external support skew risks of future rating actions to the downside. RATINGS RATIONALE The first trigger for today's downgrade is Moody's view that Greece is increasingly likely to fail to stabilize its debt ratios within the timeframe set by previously announced fiscal consolidation plans. The Greek government failed to achieve a number of the fiscal consolidation targets in 2010 as a result of fiscal shortfalls (both spending cuts and revenue collections) at the general government level and persistent weaknesses in tax collection. It has also become readily apparent that, under current policies, Greece is unlikely to meet its previously announced budget targets for 2011. These shortfalls have occurred in part because GDP growth has been weak -- in fact, the recession was deeper than was expected in 2010, and 2011 growth forecasts have been revised downwards. Moreover, in the coming weeks, Moody's expects the announcement of further fiscal austerity measures, which are likely to depress growth in 2011. This may in turn further weaken the political consensus within Greece to endure all the adjustments mandated by the reform package. The expectation of a repeated failure to meet targets carries two implications. First, Greece is unlikely to return to the credit markets in 2012 for funding, and will require additional financial assistance from the Troika in order to avoid a default. The quid pro quo for such assistance will inevitably be further fiscal austerity and economic reform measures that will be necessary to address the shortcomings of the programme to date. Second, Moody's believes that raising the austerity bar still higher will further increase implementation risk for the Greek programme. Heightened implementation risk in turn underpins the other key driver of today's downgrade to Caa1. Namely that the increased likelihood that the Troika will make the provision of financial assistance to Greece over the medium term conditional on a debt restructuring, in which private sector creditors would absorb some economic losses. Moody's believes that the public discussion about current policy options -- including the possibility that financial assistance to Greece may be delayed or suspended -- indicates that officials' cost-benefit analysis of a Greek restructuring is shifting. Still not quite at CRAP level yet but getting there. At least another bailout will fix it. More of Moody stating the obvious at the link. Quote Link to comment Share on other sites More sharing options...
onesmallstep Posted June 1, 2011 Share Posted June 1, 2011 Greece is going to be bailed out for ever, unless it isn't who knows Quote Link to comment Share on other sites More sharing options...
Deckard Posted June 1, 2011 Share Posted June 1, 2011 Jeez, can Moodys not keep up? This is a Sovereign liability management/Reprofiling/Debt rollover exercise. Most definitely NOT a default Quote Link to comment Share on other sites More sharing options...
onesmallstep Posted June 1, 2011 Share Posted June 1, 2011 they haven't got a clue, Greece is on it's way to be the manufacturing super power of europe making... err.. um.. something... ...... ice cream maybe Quote Link to comment Share on other sites More sharing options...
interestrateripoff Posted June 1, 2011 Author Share Posted June 1, 2011 they haven't got a clue, Greece is on it's way to be the manufacturing super power of europe making... err.. um.. something... ...... ice cream maybe Surely yoghurt? Quote Link to comment Share on other sites More sharing options...
RufflesTheGuineaPig Posted June 2, 2011 Share Posted June 2, 2011 Still not quite at CRAP level yet but getting there.No Caa1 *IS* crap level. Only thing below this is Junk isn't it? Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted June 2, 2011 Share Posted June 2, 2011 No Caa1 *IS* crap level. Only thing below this is Junk isn't it? They were crap 10 years ago. Quote Link to comment Share on other sites More sharing options...
RufflesTheGuineaPig Posted June 2, 2011 Share Posted June 2, 2011 They were crap 10 years ago. Complete, the cycle is. Quote Link to comment Share on other sites More sharing options...
Injin Posted June 2, 2011 Share Posted June 2, 2011 When the greeks confirm they aren't going to pay, the rest of the PIIGS are going to want to join in. The populations, definitely. This is going to be unbelievably messy. Quote Link to comment Share on other sites More sharing options...
inflating Posted June 2, 2011 Share Posted June 2, 2011 What happens to retail banking deposits if they default? (VI declaration: I have a tiny bit of money in a bank which is owned by banking groups in Portugal & Greece, and which I use when I am out of the UK for minor expenditure.) Quote Link to comment Share on other sites More sharing options...
Injin Posted June 2, 2011 Share Posted June 2, 2011 I thought all of this mess was fixed months ago! "It's contained." Also There is no problem. We might have a small problem. There is a small problem. The small problem is contained. The small problem is leaking out slightly. There is no medium sized problem. We might have a medium sized problem. Etc Quote Link to comment Share on other sites More sharing options...
yellerkat Posted June 2, 2011 Share Posted June 2, 2011 No Caa1 *IS* crap level. Only thing below this is Junk isn't it? Here's a guide to the different(ish) ratings used by Moody's, S&P and Fitch: Caa1 - Not Prime ( ) ; Substantial risks. Quote Link to comment Share on other sites More sharing options...
Wait & See Posted June 2, 2011 Share Posted June 2, 2011 If Greece default, so what. What is the IMF going to do about it anyway?? It's the blind leading the feckless at the moment. Laughable. Quote Link to comment Share on other sites More sharing options...
Compukit UK101 Posted June 2, 2011 Share Posted June 2, 2011 (edited) Here's a guide to the different(ish) ratings used by Moody's, S&P and Fitch: Caa1 - Not Prime ( ) ; Substantial risks. Seems an appropriate name "ratguide.png". A guide for rats on when to abandon sinking ships. (edit: Caa1 = holed below the waterline) Edited June 2, 2011 by Exit pursued by a bear Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.