The risks to an agreement with its creditors Athens earned Greece a downgrading of its rating Wednesday, April 29. The rating agency Moody’s has lowered to Caa1 to Caa2, which digs the country’s debt position in the category of bonds with a very high credit risk while holding still above what would be a default.
The outlook from Moody’s to this new rating remains negative, meaning the agency could still fall further if the situation did not unblock.
A “weak national environmental policy”
The Moody’s decision follows an investigation that began in February after the accession to power of the radical left Syriza party. Since the negotiations between Greece and the IMF, the ECB and the European Union on a program of reforms stalled
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Moody invoked’s “high risks to the question whether the Greek government will reach an agreement with its official creditors in time to meet its repayments on its debt “. The New York agency also relies risks remain, even if agreement on the financial perspectives of the country because “the weakening economy and the fragile domestic political environment” .
The negotiations reached only “weak results”
Greece is currently negotiating a reform program for the latest $ 7.2 billion euro aid program that granted him its European and international partners. Negotiations were opened in Brussels on Wednesday and Thursday should continue between representatives of Athens and its creditors.
“The negotiations between official creditors (…) and the Greek Government appear to have resulted in only weak results last two months “, says Moody’s, which estimates that the positions of both parties ” remain far apart on the main objectives no prospect of agreement on a new financial package “.
Athens must pay 750 million euros to the International Monetary Fund (IMF) in May but may run out of cash to meet the deadline in the absence of any new payment of help.
“The potential for increased political accident”
“The two sides reaffirmed their desire to reach an agreement that would prevent a Greek default and there are indications that the process has recently become a matter of urgency with a change in the team of Greek negotiators “,” Moody’s recognizes, however.
However, , the agency said, “the end result will be dictated mainly by political decisions taken both at EU level and in Greece and, therefore, the result of these decisions is very uncertain and the potential for an accident policy resulting in a Greek default on its debt rose “.
The other two major rating agencies also come to lower the rating of Greece, March 27 and Fitch Standard & amp; Poor’s on April 15th.
(With AFP)
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