Moody’s has slashed Greece’s credit rating on fears Athen’s efforts to reduce its debt will not be enough. The rating was cut by three notches to B1 from Ba1 with a negative outlook.
Moody’s said that was because of significant risks to Greece’s fiscal consolidation plan which made a default more likely.
The move will put further pressure on EU leaders to ease the tough repayment terms on its bailout loans to Greece.
Moody’s now has the lowest rating for Greece of all the major credit agencies and is the first to classify Greek government debt as ‘highly speculative’.
The Greek finance ministry said the cut was completely unjustified.
Last May Greece signed a 110 billion euro rescue package with the EU and IMF to avoid default, but many see the repayment terms as too onerous.
European Monetary Affairs Commissioner Olli Rehn told a German newspaper on Saturday that countries that share the euro currency must grant Greece and fellow debt-strapped nation Ireland easier terms on loans they have provided.