Greece has had its creditworthiness slashed by Fitch, one of the world's top three ratings agencies, in another blow to efforts to get the country's finances back on track. Fitch said that the downgrade reflected the massive challenges the country faces in implementing cuts, tax rises and other reforms needed to secure its solvency.
Investors took flight as the rating of the Greek government's debt moved three notches further into 'junk' status, at 'B+'. The spread between 10-year Greek and German government bond yields, a gauge of the risk of holding Greek debt, touched a record 13.73 percentage points.
Fitch said its revised rating assumes that Greece, already the recipient of a €110bn (£96bn) bail-out from the EU and International Monetary Fund (IMF) will receive "substantial new money", allowing it to avoid a debt restructuring – where bondholders are paid later or less than the amount owed.
However, more downgrades could follow if the country's international rescuers do not offer a credible plan for the country, the agency said.
The warning came as the IMF urged Europe to offer more support to its struggling nations. "The countries cannot do it alone," said Ajai Chopra, the head of the IMF mission in Ireland. (read more)
