The Greek government’s latest attempt to lower the country’s massive debt burden has resulted in a downgrade from the rating agency Standard & Poor’s.
S&P cut Greece’s sovereign long-term foreign currency credit rating to “selective default” from an already low “CCC” rating.
That followed the announcement by Athens that it would spend 10 billion euros to buy back government bonds at well below their face value.
Analysts say the downgrade is pro forma and will not have much effect.
The rating agency said it sees the buyback as essentially a distressed debt restructuring which is tantamount to a default. S&P indicated it may raise its long-term credit rating on Greece back to junk-grade “CCC” once the buyback is complete.
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