Monday, July 25, 2011

Moody's Downgrades Greece Further


PARIS — Moody's Investors Service cut Greece's credit rating Monday after concluding that the euro-zone bailout plan announced last week will require private-sector holders of Greek debt to take credit losses.

The credit rating agency offered a generally positive assessment of the plan agreed to by European leaders last Thursday, saying it "benefits all euro area sovereigns by containing the contagion risk that would likely have followed a disorderly payment default on existing Greek debt."

But Moody's expressed concern about "the negative precedent set by the endorsement of distressed exchanges" between Greece and its creditors, a reference to the bond swaps that private investors will undertake.

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