Standard & Poor’s rating agency cut Greece’s credit grade by one notch further into junk status amid the country’s deteriorating financial situation. The agency says it now sees a 50-percent chance of Greece leaving the eurozone.
In a statement, S&P said it interprets the Greek government’s decision to hold a referendum on the rescue creditors’ proposals for a bailout deal as indication that it “will prioritize domestic politics over financial and economic stability, commercial debt payments and eurozone membership.”
Additionally, it was announced that Greece says it will not be able to make a $1.8 billion loan payment due Tuesday to the International Monetary Fund (IMF), with Athens facing the expiration of its international bailout and without enough money to pay the debt.
The Athens stock exchange is closed for six days as Greece faced the end Tuesday of its bailout agreement with its international lenders. It is seeking a new $8 billion loan segment, but has balked at imposing new austerity measures demanded by its creditors.
Greek bonds plummeted Monday, with interest rates surging more than 12 percentage points to 33 percent, showing investors had little confidence in Greece’s financial stability.
Finally, F itch Ratings on Monday downgraded Greece-based National Bank of Greece S.A. (NBG), Piraeus Bank, S.A. (Piraeus), Eurobank Ergasias S.A. (Eurobank) and Alpha Bank AE’s (Alpha) Long- and Short-term Issuer Default Ratings (IDRs) to ‘RD’ from ‘CCC’ and ‘C’, respectively. Fitch has also downgraded these banks’ Viability Ratings (VRs) to ‘f’ from ‘ccc’.