Moody’s Investors Service is the latest to cut Greece’s debt rating.
But the rating agency partially reassured financial markets by saying the country remained far from a crisis.
That led to a rally in Greek government bonds and bank shares.
Moody’s downgrade was also less severe than those of Fitch and Standard & Poor’s. It cut from A1 to A2, a couple of steps above the others’ BBB plus.
All three cited Greece’s ballooning budget deficit and debt burden and all three continue to keep their outlook for Greece negative, meaning it risks a further downgrade.
Trying to appease the people and please the markets, Greek Prime Minister George Papandreou has announced austerity measures.
That led to a one-day protest strike last week by communist affiliated trade unions.
Moody’s said the Athens government’s rating depends on its ability to overcome resistance to the reforms adding: “There’s clearly not much of a history of public acceptance.”
If Moody’s does cut Greece’s rating one more level – to its A3 grade – Athens could face future restrictions on borrowing from the European Central Bank, something it has needed to do heavily in the past.