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Four Notch Moody's Downgrade Of Greece To Ba1 From A3, Confirms Country Is Junk
Full Moody's report:
London, 14 June 2010 -- Moody's Investors Service has today downgraded Greece's government bond ratings by four notches to Ba1 from A3, reflecting its view of the country's medium-term credit fundamentals. Today's rating action concludes the review for possible downgrade, which Moody's initiated on 22 April 2010. Moody's has also downgraded Greece's short-term issuer rating to Not-Prime from Prime-1. Greece's country ceilings for bonds and bank deposits are unaffected by the review and remain at Aaa (in line with the Eurozone's rating). The outlook on all ratings is stable.
"The Ba1 rating reflects our analysis of the balance of the strengths and risks associated with the Eurozone/IMF support package. The package effectively eliminates any near-term risk of a liquidity-driven default and encourages the implementation of a credible, feasible, and incentive-compatible set of structural reforms, which have a high likelihood of stabilizing debt service requirements at manageable levels," says Sarah Carlson, Vice President-Senior Analyst in Moody's Sovereign Risk Group and lead analyst for Greece. "Nevertheless, the macroeconomic and implementation risks associated with the programme are substantial and more consistent with a Ba1 rating."
Moody's believes that the Eurozone/IMF support package has sheltered the Greek government from the markets while it enacts the very ambitious fiscal austerity measures and structural economic reforms stipulated by the package. These have the potential to restore market confidence, depending on the effectiveness of the government's execution, and place the country on a more stable debt trajectory. The rating agency's base-case scenario envisions Greece implementing the policy changes it needs to stabilise its debt-to-GDP ratio at around 150% by 2013, and reduce its debt burden, defined as the interest payment/revenues ratio, gradually thereafter (expected at 20% in 2014). Should the economy respond positively to the competitiveness-enhancing structural reforms, debt stabilisation could be achieved earlier.
"There is considerable uncertainty surrounding the timing and impact of these measures on the country's economic growth, particularly in a less supportive global economic environment," says Ms Carlson. "This uncertainty represents a risk that leads Moody's to believe that Greece's creditworthiness is now consistent with a Ba1 rating, a rating which incorporates a greater, albeit, low risk of default."
Moody's outlook on Greece's ratings is stable, reflecting the substantial probability that the rating will not change over the next 12 to 18 months. The key factors that will influence the rating agency's view will be the performance of the Greek economy, especially that of GDP and tax revenues. Information on these developments will take some time to accumulate and may prove to be either credit positive or negative.
For further information, please see Moody's Special Comment "Key Drivers of Greece's Downgrade to Ba1" available on www.moodys.com.
Moody's previous rating action on Greece was implemented on 22 April 2010, when the rating agency downgraded Greece's rating to A3 and placed it under review for further downgrade.
The principal methodology used in rating the government of Greece is "Moody's Sovereign Bond Methodology", published in September 2008, which can be found at www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website.
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I was just going to send this/post this.
Freakin crazy! Get the hard hats out for the falling markets!
Guy who saw only A (different ratings agency though) and complain about the mental effect.
You start to see some B in here.
Moody's fuck'em...
like their assesments carry any legitimacy after being an accomplice to global market fraud...
so, what took'em so long...now, lets ge on with it...
hello, Spain.........
Moody's ratings are like expiration stamps at the back of the yogurt container; except that Moody's stamps them after the expiration date
+1
Monsiuer Creosote just ate the wafer thin mint.
Or is that the Iranian Gaza aid boats?
Or Katla?
Or a GOM Hurricane?
Or a Hiccup in the US Weekly Debt Roll-over?
Or...
Or...
(event horizon) also known as whenever they feel like it.
I really really need Moody's analysis on this one
What--you mean the Euro problem is not fully contained, and the Great Path to Prosperity clear? That's what the MSM said this morning...
and that's what Leo said too...
Here we go again!
Ratings downgrades are meaningless in the context of perpetual QE/ZIRP/reverse repo/sterilization/monteization/term-ABS facilities not to mention "disclosures" about "proper" haircuts for no frills private label bonds made for Merv (BOE/FT Alphaville)
I guess the market will be up 100 points on this news.I mean damn - does is any human really trading right now? (Yes - the dumb ones.)
D'oh!!=)
Well, that explains a lot. "Without a head of sovereign research" It's been just the torso doing the job all along.
Gotta love it, reason is "risks tied to EU rescue plan". Powerful A-Team approach.
Well, that really sent the markets into a spin....
So basically the credit ratings agencies can only see about 3 months into the future... Wow, that gives a lot of confidence when buying a 10 year instrument.
Future?! They can barely see into the past, then it takes them three months to write the report.
+1
+2
"+1" for ur comments; "+1" for your avatar
And in other breaking news, the New Orleans Saints won their first Superbowl ever!!!
I don't understand how a rating agency could ever fail so hard as to misjudge a corporation by four notches of their own scale...
I am just guessing here, but I think they had to try really really hard to be that incompetent.
This news does not square with the fact that they want to market up today so it gets ignored. When they want the market to fall, then this would serve as a great excuse.
It's a bit like a cardiologist going to a graveyard and putting his stethoscope on the dirt and saying, "It doesn't look good."
better issue is over/under on default......October 2010.
just before US mid-terms.
better issue is over/under on default......October 2010.
just before US mid-terms.
All your junk belongs to us now...
Query: How does this affect the banks and the insurance companies holding the paper?
They do not need to order Toilet paper for the stalls for a long time.
However bonds can be a little rough when rubbed on a Bankers ASS
Wasn't Greece already junk before they got downgraded to junkier? LOL
Moody's is about 3 months late as usual. Spain, Italy, Portugal, all in the same boat, even with the so-called bailout funds that don't exist.
This is going to end badly, they can try to pump Scam St. all they want, and it will all end badly. Smart people are moving their money to safe(er), if such a thing exists, places to hide.
Forget about junk ratings, there's something much more ominous coming that way.
"Mr. Monks [chief of Europe's trade union chiefs] reported that Mr. Barroso has similar concerns, but based on diametrically opposed reasoning. He said the commission chief believes the austerity packages will save Europe from returning to the darkest days of the last century rather than precipitating the fall.
"I had a discussion with Barroso last Friday about what can be done for Greece, Spain, Portugal and the rest and his message was blunt: 'Look, if they do not carry out these austerity packages, these countries could virtually disappear in the way that we know them as democracies. They've got no choice, this is it'.""
http://www.businessweek.com/globalbiz/content/jun2010/gb20100614_580865.htm
austerity measures wil "save" the Eurozone about as much as bank bailouts "saved" the american economy. 1930's here we come!