As AdvisorOne reported on May 3, Greece had rejected calls to restructure its debt. George Papaconstantinou, Greece’s Finance Minister, said acting on such calls “would be a huge mistake for the country.”
As a result, Greece’s credit rating was cut on Monday two levels to B from BB- by Standard & Poor’s, which said further reductions were possible as the risk of default rose.
Bloomberg reports another cut would make Greece the lowest-rated country in Europe as today’s reduction, the fourth by S&P since April 2010, left it even with Belarus. The yield on Greek 10-year bonds rose 21 basis points to 15.7%, more than twice the level of a year ago when Greece accepted an international bailout.
The S&P decision, according to Bloomberg, came on the first business day after an unannounced Friday evening meeting of European finance ministers May 6 in which they agreed Greece needed more help to avoid a restructuring. Extended repayment terms and demands for collateral may be part of a new aid plan. Moody’s Investors Service on Monday placed Greece’s B1 rating on review for downgrade.