S&P cuts Greece rating after IMF payment delay
[WASHINGTON] Standard & Poor's cut its already deep-junk rating for Greek bonds by one notch to "CCC" on Wednesday after the cash-strapped country delayed a debt payment to the International Monetary Fund last week.
The delay "appears to demonstrate that the Greek government is prioritizing pension and other domestic spending over its scheduled debt service obligations," S&P said.
Without a turnaround that would see the economy begin growing, and without deep public-sector reform, S&P said, "Greece's debt is unsustainable."
S&P said its view was that in the absence of a new deal with official creditors to release 7.2 billion euros (S$11 billion) in bailout funding, "the Greek government will likely default on its commercial debt within the next 12 months." With the country still at odds with the European Commission, the European Central Bank and the IMF over the terms for obtaining more bailout funding, S&P described a situation in which the government could institute capital controls to block further deposit outflows from its ECB-supported banks.
It also said the government could resort to issuing a separate currency parallel to the euro to pay its domestic bills.
"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," S&P said.
"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."
AFP
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
International
Sri Lanka’s economy expected to grow 3% in 2024, central bank says
Yellen says US can bring inflation down without hurting jobs
US dollar briefly falls versus yen after GDP data
US weekly jobless claims unexpectedly fall
US economic growth slows more than expected in Q1
Malaysia ex-PM Mahathir facing anti-graft probe in a case involving his sons