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Jens Bastian – Time to challenge credit rating agencies’ monopoly
Last week, Moody’sdowngraded Greece’s credit rating by a staggering four notches, slashing the country’s sovereign credit rating from A3 to Ba1. In practice, this demoted Greek bonds from investment grade to junk status. Moody’s was the second of the three leading international credit rating agencies to reduce its rating on Greek bonds to junk.
With its unexpected and highly controversial downgrade, Moody’s followed the decision of its US-based peer Standard & Poor’s, which downgraded Greek sovereign bonds to BB+, equivalent to junk status, in
April 2010. S&P’s action against Greece was the first time that a eurozone member lost its investment grade rating since the introduction of the common currency in 1999. The third international credit rating agency, Fitch, currently has a BBB- rating on Greek sovereign bonds, the lowest investment grade.
Moody’s argued in its June rating report that uncertainty over the Greek government’s capacity to reduce its public debt levels had increased the agency’s risk assessment of the country. Greece’s creditworthiness is seen as incorporating a greater, albeit low risk of default.
What is particularly striking about Moody’s decision – and it is not the first time that this has happened – is the issuance of a downgrade while Greece is being monitored by the so-called troika of the International Monetary Fund, European Central Bank and European Commission.
Read the entire article in ATHENS PLUS / page 9
Last week, Moody’sdowngraded Greece’s credit rating by a staggering four notches, slashing the country’s sovereign credit rating from A3 to Ba1. In practice, this demoted Greek bonds from investment grade to junk status. Moody’s was the second of the three leading international credit rating agencies to reduce its rating on Greek bonds to junk.
With its unexpected and highly controversial downgrade, Moody’s followed the decision of its US-based peer Standard & Poor’s, which downgraded Greek sovereign bonds to BB+, equivalent to junk status, in
April 2010. S&P’s action against Greece was the first time that a eurozone member lost its investment grade rating since the introduction of the common currency in 1999. The third international credit rating agency, Fitch, currently has a BBB- rating on Greek sovereign bonds, the lowest investment grade.
Moody’s argued in its June rating report that uncertainty over the Greek government’s capacity to reduce its public debt levels had increased the agency’s risk assessment of the country. Greece’s creditworthiness is seen as incorporating a greater, albeit low risk of default.
What is particularly striking about Moody’s decision – and it is not the first time that this has happened – is the issuance of a downgrade while Greece is being monitored by the so-called troika of the International Monetary Fund, European Central Bank and European Commission.
Read the entire article in ATHENS PLUS / page 9
July 27, 2010 at 3:36 pm
How many people are in the position of wanting to make more money but feel so hemmed in by the pressures of just trying to stay afloat financially that seeing the clear light of day seems nearly impossible? The answer to this question is that there are probably millions whose hopes and dreams of a better future for themselves and their families is more like a pipe dream.