The ratings agency Moody's has downgraded Greece to the lowest rating on its bond scale. The agency lowered Greece's rating to C from Ca, warning that the risk of default remained high after a recent EU debt deal.
Greece was further downgraded by Moody's ratings agency late on Friday to the lowest rating on its bond scale.
The agency said it had lowered Greece's sovereign rating from Ca to C in the wake of a recent EU deal to write off 107 billion euros ($141.3 billion) of Greek sovereign debt which will see private investors incur major losses.
Greece is still facing default, Moody's warned, even if a bond-swap deal with banks and other private investors is successful.
"Looking ahead, the EU program and proposed debt exchanges will reduce Greece's debt burden, but the risk of a default even after the debt exchange has been completed remains high," Moody's said.
Investors are expected to lose more in excess of 70 percent of the face value of their Greek bonds in exchange for new ones which will be issued with more favorable repayment terms. The planned bond-swap is an integral part of a second bailout package for Greece adopted in principle by other eurozone countries and the International Monetary Fund. Final approval on the debt reduction deal is due next week.
Moody's agreed to "reassess the credit risk profile" after the new bonds have been issued.
Rating's agency Standard & Poor's took similar action on Monday by cutting its rating outlook to the European Financial Stability Facility (EFSF), the eurozone bailout facility to negative. The cut means the EFSF could be downgraded outright in the future after losing its AA+ rating in January.
ccp/ipj (AFP, AP)