Moody’s Investors Service on Monday slashed Greece’s credit rating three notches, from Ba1 to B1, and added that further cuts might be in the works if it cannot reduce its debt. The move comes as Germany, the Netherlands and Finland stand opposed to any approval of debt buy-backs or bond purchases.

Reuters reported that the cost of insuring Greek, Portuguese and Spanish debt rose in response to the move, as Moody’s characterized Greek debt as "highly speculative" and ranked it lower than Egypt.

Athens was not pleased, and the Greek finance ministry responded with the statement, "The rating downgrade announced by Moody's today is completely unjustified." The ministry further cited improved collection of revenues and progress on its fiscal consolidation as evidence that the country's financial situation was improving.

However, it acknowledged that the downgrade would make its financial situation more challenging, saying, "Decisions such as Moody's today can initiate damaging self-fulfilling prophecies."

Some analysts took issue with that statement. Christoph Weil, an economist at Commerzbank, said in the report, "This is not going to be the last downgrade for Greece. The market has already discounted that Greece will need to restructure its debt, so the rating agencies are just running behind the market."

Olli Rehn, European monetary affairs commissioner, said in a German newspaper on Saturday that euro zone nations must loosen the stringent terms on bailout packages granted to both Greece and Ireland. The matter will be considered at a euro zone summit meeting on Friday, although Germany has held firm against any easing of terms. Lately, however, there have been intimations from Berlin that it might accept a lengthening of the loans to Greece to a seven-year term and consider lowering the interest rate.