The debt rating of Greece can be lowered within a few months, if the country fails to follow its plan to reduce the largest in the EU budget deficit - have a Moody's Investors Service.
"If the deviation is significant, we can actually somewhat lower rating," - said in an interview in Tokyo today Kallet Pierre (Pierre Cailleteau), managing director for sovereign risk at Moody. Standard & Poor's said yesterday that it might lower the rating by the end of March, as the weak economy and the political opposition threatened the country's ability to reduce the budget deficit.
The euro fell against the yen to its lowest level in a year, Asian markets declined and the cost of protection against default of Greek government bonds soared on concern that the country may need to help the EU in debt payments. The unions staged a strike yesterday in order to counter the actions of Prime Minister George Papandreou (George Papandreou) to reduce costs.
"If in a few months it appears that there are significant deviations from the plan, then it is likely that we will make the corresponding changes in the rating", - said Kallet. At the same time, Moody's rating could stabilize at the level of A2, if Greece will be tough to follow its austerity measures.
"We must allow the government to implement their plans," - said Kallet. "You can not expect from the government" recycling "of public finances for a few days."
He said that the financial position of Greece has not changed since December, when Moody lowered the debt rating to the current level. Rating Moody for Greece - the sixth highest in the list, two points higher than BBB +, to assess the Standard & Poor's and Fitch Ratings.
It is difficult to hold
If Moody's credit rating will lower to the same level as the other major rating agencies, it can aggravate the financial distress of Greece at the end of this year, when the ECB will have to revert to the old rules of which were weakened during the period of global economic recession. The Greek government bonds are no longer able to serve as collateral for the ECB, making loans for the country even more difficult.
Doubts about the ability of Greece to finance the deficits and debts have appeared in the financial markets at a time when the government revealed details about a deficit budget was last year's 12.7%, which is more than 4 times higher than the limit set for countries within the eurozone, as Greek deficit was the largest in terms of the 27 EU countries.
The euro fell 1.1% to 120.73 yen at 15:04 in Tokyo after earlier falling to 120.46, which was the lowest level since February 24, 2009. Currencies 16 countries had slid by 0.5% against the dollar to a mark of $ 1.3467.
Default swaps
Credit default swaps to protect debt of Greece, traded at 10 basis points higher at around 375 basis points, according to Royal Bank of Scotland Group Plc. The contracts rose 19 basis points this week, according to the prices CMA DataVision in New York.
Investors who work with risk premia, are in demand Greek 10-year bonds instead of German, as the first most significantly grown for two weeks. The difference in yields between 10-year Greek and German bonds widened today to 3.39 percentage points from 3.32 yesterday, according to data compiled by Bloomberg. The gap reached 3.96 percentage points on Jan. 28 and became the most significant since October 1998.
"We believe that further declines in Greece on one or two steps perhaps within a month" - said S & P analysts led by Mark Myrsnikom (Marko Mrsnik) in London, published yesterday in a statement.
EU governments are looking for assurances that Papandreou would reduce costs before they will be formulated, what kind of assistance they can offer. EU officials and the ECB have visited Athens this week to make sure that the reduction is really going on.
Additional measures
Under the provisions adopted in this month euro-zone finance ministers, the Greek government will be forced to take additional measures to reduce the hole in the budget if the European commission next month is not satisfied with the current course. These measures may include a higher VAT, luxury tax, higher taxes on energy use and reduce costs - they said.
Kallet also said after the interview that the AAA country "losing height". U.S. deficit reduces national security buffer against potential shocks - he said.
Rating agency Moody stated that the AAA rating of U.S. bonds will be under pressure in the future unless additional measures are taken to reduce the deficit. According to the forecast of the government, the country faces an unprecedented budget deficit of $ 1.6 trillion for the year ending September 30.
"If the deviation is significant, we can actually somewhat lower rating," - said in an interview in Tokyo today Kallet Pierre (Pierre Cailleteau), managing director for sovereign risk at Moody. Standard & Poor's said yesterday that it might lower the rating by the end of March, as the weak economy and the political opposition threatened the country's ability to reduce the budget deficit.
The euro fell against the yen to its lowest level in a year, Asian markets declined and the cost of protection against default of Greek government bonds soared on concern that the country may need to help the EU in debt payments. The unions staged a strike yesterday in order to counter the actions of Prime Minister George Papandreou (George Papandreou) to reduce costs.
"If in a few months it appears that there are significant deviations from the plan, then it is likely that we will make the corresponding changes in the rating", - said Kallet. At the same time, Moody's rating could stabilize at the level of A2, if Greece will be tough to follow its austerity measures.
"We must allow the government to implement their plans," - said Kallet. "You can not expect from the government" recycling "of public finances for a few days."
He said that the financial position of Greece has not changed since December, when Moody lowered the debt rating to the current level. Rating Moody for Greece - the sixth highest in the list, two points higher than BBB +, to assess the Standard & Poor's and Fitch Ratings.
It is difficult to hold
If Moody's credit rating will lower to the same level as the other major rating agencies, it can aggravate the financial distress of Greece at the end of this year, when the ECB will have to revert to the old rules of which were weakened during the period of global economic recession. The Greek government bonds are no longer able to serve as collateral for the ECB, making loans for the country even more difficult.
Doubts about the ability of Greece to finance the deficits and debts have appeared in the financial markets at a time when the government revealed details about a deficit budget was last year's 12.7%, which is more than 4 times higher than the limit set for countries within the eurozone, as Greek deficit was the largest in terms of the 27 EU countries.
The euro fell 1.1% to 120.73 yen at 15:04 in Tokyo after earlier falling to 120.46, which was the lowest level since February 24, 2009. Currencies 16 countries had slid by 0.5% against the dollar to a mark of $ 1.3467.
Default swaps
Credit default swaps to protect debt of Greece, traded at 10 basis points higher at around 375 basis points, according to Royal Bank of Scotland Group Plc. The contracts rose 19 basis points this week, according to the prices CMA DataVision in New York.
Investors who work with risk premia, are in demand Greek 10-year bonds instead of German, as the first most significantly grown for two weeks. The difference in yields between 10-year Greek and German bonds widened today to 3.39 percentage points from 3.32 yesterday, according to data compiled by Bloomberg. The gap reached 3.96 percentage points on Jan. 28 and became the most significant since October 1998.
"We believe that further declines in Greece on one or two steps perhaps within a month" - said S & P analysts led by Mark Myrsnikom (Marko Mrsnik) in London, published yesterday in a statement.
EU governments are looking for assurances that Papandreou would reduce costs before they will be formulated, what kind of assistance they can offer. EU officials and the ECB have visited Athens this week to make sure that the reduction is really going on.
Additional measures
Under the provisions adopted in this month euro-zone finance ministers, the Greek government will be forced to take additional measures to reduce the hole in the budget if the European commission next month is not satisfied with the current course. These measures may include a higher VAT, luxury tax, higher taxes on energy use and reduce costs - they said.
Kallet also said after the interview that the AAA country "losing height". U.S. deficit reduces national security buffer against potential shocks - he said.
Rating agency Moody stated that the AAA rating of U.S. bonds will be under pressure in the future unless additional measures are taken to reduce the deficit. According to the forecast of the government, the country faces an unprecedented budget deficit of $ 1.6 trillion for the year ending September 30.
Bloomberg
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