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Moody's Downgrades Greece To A3, On Review For Further Downgrade (Full Text)
In true fashion Moody's wakes up the day of bankruptcy. The new rating? A whopping A3.
EURUSD drops right back below 1.33.
Full text if anyone cares what these cavemen have to say:
London, 22 April 2010 -- Moody's Investors Service has today downgraded the government bond ratings of Greece to A3 from A2 and placed them on review for further possible downgrade. This decision is based on Moody's view that there is a significant risk that debt may only stabilise at a higher and more costly level than previously estimated.
The rating review will determine whether the ratings will remain in the A range and their likely outlook. Moody's will conclude the ratings review once it has obtained greater clarity on longer-term policy measures and Greece's macroeconomic prospects. In line with its usual practice, the rating agency expects to conclude the review at any point during the next three months.
Moody's also put Greece's Prime-1 short-term issuer rating under review for downgrade. Greece's country ceilings for bonds and bank deposits continue to be rated Aaa (in line with the Eurozone's rating) and remain unaffected by today's rating action or the review.
"Although the Greek government appears to be on, or even ahead of, schedule in terms of the implementation of the actions laid out in its Stability and Growth Programme, the difficult macroeconomic and financial environment has made continued adherence to the programme considerably more challenging," says Sarah Carlson, VP-Senior Analyst in Moody's Sovereign Risk Group and lead analyst for Greece.
In December 2009, Moody's downgraded Greece's government bond rating to A2 with a negative outlook from A1. At the time, the A2 rating was based on three factors: (1) the realisation that the Greek government's ambitious Stability and Growth Programme entails significant execution risk; (2) the very limited liquidity risk faced by Greece because of the ECB's continued willingness to accept the government's debt as collateral; and (3) the assumption that conditional support from the EU and/or IMF would be forthcoming, if necessary, and confidence-enhancing.
Four months later, the government's resolve to shore up the country's fundamental creditworthiness does not seem to be weakening. In general, the government has produced a number of positive surprises, including an indication on 20 April 2010 that structural economic measures are now in the pipeline.
However, the fractious mobilisation of external assistance has made it significantly more difficult for Greece to maintain its debt metrics within the A range. Moreover, the revision of Greek debt and deficit statistics on 22 April 2010 has further raised the bar for the government to achieve the goals it laid out in the Stability and Growth Programme. As a result, Moody's now believes that debt stabilisation will, in all likelihood, eventually occur but that it may materialise at a higher price and a level more consistent with a Baa-range rating.
Given this context, today's downgrade of Greece's rating to A3 and review for further possible downgrade is consistent with Moody's aim to move ratings in an orderly fashion, providing a medium-term assessment of creditworthiness.
"It is unlikely that the rating will remain at A3, unless the government's actions can restore confidence in the markets and counteract the prevailing headwinds of high interest rates and low growth that could ultimately undermine the government's ability to sustainably cut debt levels," said Ms. Carlson.
Therefore, Moody's review will aim to assess the prospects for credible debt stabilisation against the backdrop of financial market scepticism, the courageous but unpopular fiscal adjustment, and the painful economic restructuring.
The previous rating action on Greece was implemented on 22 December 2009, when Moody's downgraded Greece's rating to A2 with a negative outlook.
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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Deep Shah.
Rating agencies are such a joke. It is a shame they have a perception of respectability.
"The new rating? A whopping A3."
Baby steps Tyler, baby steps. After months of lying about the true condition of Greek debt, Moody's and company must break the bad news gently to the deluded who believe what they're told.
It's all about plausible deniability and the desire to avoid public hangings.
LOL. They'll default before they go junk status. What's new?
Lehman went into bankruptcy at A3. Maybe Moody's forgot that their scale goes any lower?
Send them some memory sticks....
This could go on for months, possibly years. Let's get on to Spain and Italy!
my money is on portugal being next
need to set up an intrade account... =)
Moody's seem to be always one step ahead....... :eek: ;-)
Why do we need ratings agencies when we've got ZH?
Hey, TD, or whoever you really are, hope you are enjoying your taunting from the zerohedge.net site. We see it for what it is... good ol' boy club desperation. You are stealing their lunch and their thunder and ripping the cover off the cesspool. Rock on, Tyler... Marla... and all of the other superb contributors on ZH. Keep their chairs on fire.
"First they ignore you, then they ridicule you, then they fight you, then you win." by Mahatma Gandhi.
ZH seems to be well past the ignore you stage at this point. Congratulations!
Who wants to bet that stocks sink, especially financials when Obama starts speaking at 11:55AM EST?
They will fall on his comments but probably from a higher level than where they are when I type this. Again, it will only lead to more ecstatic buyers looking for any chance to get AAPL cheaper.
[I think I found who owns zh.net ... ↑↑]
he is backing off the intense rhetoric that was expected, and the market is buying it. i guess we'll be back at new highs again soon.
we have not re-tested the highs yet like we did the last 4 tops since last year, so it makes sense that we would have one more go at 1212-1213 before we either break through or head down for a correction.
TD is Bernanke
It should be B- on it's way to D. Another stellar rating from Moody's. When does this useless company go out of business?
Moodys may just as well rate Bra sizes, maybe they'd be more accurate.....?
They would probably rate Titanic bonds AAA after it has hit the iceberg.
Just remember how long it took them with ABK and MBI, lo those many months ago.
Johnny Cash - Hurt (NIN cover)
http://www.youtube.com/watch?v=SmVAWKfJ4Go
I hurt myself today. To see if I still feel. I focus on the pain. The only thing that's real.
......
What have I become? My sweetest friend. Everyone I know goes away, in the end.
And you could have it all. My empire of dirt.
I will let you down. I will make you hurt.
Trent Reznor said, when he first heard Cash's recording of his song, that he felt like he had reached a peak in his career. This recording is amazing.
+100
I agree.
Hurt
Lyrics by Trent Reznor
I hurt myself today
to see if I still feel
I focus on the pain
the only thing that's real
the needle tears a hole
the old familiar sting
try to kill it all away
but I remember everything
what have I become?
my sweetest friend
everyone I know
goes away in the end
you could have it all
my empire of dirt
I will let you down
I will make you hurt
I wear my crown of thorns
on my liar's chair
full of broken thoughts
I cannot repair
beneath the stain of time
the feeling disappears
you are someone else
I am still right here
what have I become?
my sweetest friend
everyone I know
goes away in the end
you could have it all
my empire of dirt
I will let you down
I will make you hurt
if I could start again
a million miles away
I would keep myself
I would find a way
Agree, I like Cash's cover better than the original version.
RATE MY GREEK DEBT.
Moody's won't do it but we can. Put some junk in my trunk!
Use "flag as junk button" or not, to rate my Greek debt.
I gave you a Junk rating, or was that for the Greek debt? I'm confused. I like you but I don't like the debt. It actually hurt to junk you. It must be that Cognitive Dissonance I always talk about. :>)
I misjudged. I thought we had a chance here at generating a record number of junks for a post. I guess there is a way of looking at it that Greek debt is no junkier than any other debt out there any more. Someone down thread was talking about ratings as being relative rather than absolute as a possible explanation for Moody's rating.
Thanks CD for your support of my junky little ZH social science fair project.
Moodys? Check. Last, but not least, stands Leo K. Alone against the world. The pension world, and ZeroHedge, stand ready...waiting...still waiting. Leo?
In other news Moody's has downgraded Jennifer Aniston's dateability to A1/negative watch on news that she has been dumped by R2D2 and has moved back in with her mother. Developing...
greece is a simple junk rated ba1,ba2,ba3 not A3 .
this is the offical definition of moody's:
A1, A2, A3 Moody judges obligations rated A as "upper-medium grade", subject to "low credit risk", but that have elements "present that suggest a susceptibility to impairment over the long term"
Ba1, Ba2, Ba3 Moody judges obligations rated Ba to have "questionable credit quality."
i think the quality of the greek debt is questionable......
Well, the homeless crack addict who lives under the bridge downtown told me Moody's rated him B+, so Greece at A3 seems reasonable.
LOL!! Very funny!!:))
Are the Moody's still together? I always loved tuesday Afternoon.
where's Buffett?
he must be buying tons of this greek stuff.
there is more where that came from.
so what DOES is mean when an 8% is not junk? nothing to all of you who say "the ratings agency are a joke"? and what is "better"? not to be rated junk and have "it" go to zero? or be rated "not junk" and have it go to zero? you folks are not being very logical here. in other words--if you really thought about what was going on you'd really understand just how scary this situation not only is (eh, they're just stupid greeks) and could be (i'll take an aircraft carrier battle group with that army division thank you very much.)
Sorry, I don't quite understand. Are you suggesting that Greece deserves an artificially high rating because a bad rating would be bad or 'scary' for the world/economy?
What I'd like is to see ratings that actually correspond to risk, not 'ratings that make us all feel better about ourselves and the world'.
Are not ratings to a benchmark, or are they in comparison to other risk? When they upgraded California last week or two, I almost fell out of my chair, then I realised it may be more of a homology of risk assessment, than based on a static standard. In other words, the least risk entity will ALWAYS be AAA, and the others will be rated from that in a declining grade. If that is so, then are bonds being manipulated (temporarily) by the data they are being fed? Can someone explain it to me?
There went the trigger for Titlos, PLC's 5.4 billion Euro collateral call...wonder if they've got it?
I just downgraded Moody's to F minus.
Our PM feels more socialist now. He doesn't care about all these figures, as he says to the Greeks. He is a real socialist!
Well, glad I went with my call last night off the ZH article regarding Greece real debt announcement and went short the EURUSD. Up a nice fresh 120 PIPS and just added to my short position this afternoon.
EURO is toast, I don't care what crap they dream up and try to pump the EUR there are too many countries caught lying about their GDP and debt. The other PIIGS are coming to join the bankruptcy party and EURO will be worthless as we know it. If the IMF is smart they will stand aside and say they want no part of it.
A3? Isn't that the rating Moody's gave Bear Stearns the day after they went Tango Uniform also?
I sense a trend.....or did they finally move Countrywide to D?????
When bankers and legislators get together with "impartial" ratings agencies this is what you get. Greek will not default because of the miraculous logic defying recovery we are thoroughly enjoying the fuck out of in the old U.States of A.