Greece: Credit rating now worst in the world

14th June 2011

The Financial Times (paywall) reported that Greece was downgraded close to default on Monday, sending yields on its 10-year bonds near to fresh euro-era highs.

Standard & Poor's cut Greece's long-term sovereign credit rating with the expectation that  private creditors are likely to be involved in the country's next bail-out.

Greece is now the lowest-rated sovereign in the world, below Ecuador, Jamaica, Pakistan and Grenada.

The Telegraph reported that Greek 10-year bond yields jumped to more than 17 per cent for the second time this year,  closing at 16.97 per cent.

The bond yields of other credit-stretched nations also rose, Portuguese and Irish 10-year bond yields closed at euro-era highs of 10.66 per cent and 11.34 per cent.

The downgrade triggered an angry response from the Greek finance ministry which slammed Standard & Poor's decision as being based on "rumours and statements by representatives of the European Commission and European Central Bank".

The ministry claimed the decision ignores the intense consultations taking place between the same institutions and the International Monetary Fund aimed at coming to a solution to the debt crisis.

The BBC News website said the Greek government had been trying to push through fresh austerity measures as part of the conditions for the EU and IMF's 110bn euro ($159bn; £97bn) bail-out package.

The package will be debated in parliament later this week, with unions planning a general strike for Wednesday.

On the Telegraph comment boards WDC2301 writes: "The only thing I can thank Gordon Brown for is the fact that he kept us out of the Euro."

hospitaller said: "This is like watching a train wreck in slow motion. Greece is going to default and will leave the euro, the ECB will be left holding worthless bonds and will have no assets, French and German banks will have to be recapitalised by their governments, in direct defiance of the EU treaty, the euro will collapse as the rest of the PIIGS follow the Greeks out and the EU will be finished.

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