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| Version 1 | Version 2 |
|---|---|
| Greece debt rating cut further by Moody's | Greece debt rating cut further by Moody's |
| (about 2 hours later) | |
| Moody's has downgraded Greece's debt to "highly speculative" prompting an angry response from the finance ministry. | Moody's has downgraded Greece's debt to "highly speculative" prompting an angry response from the finance ministry. |
| Greek bonds fell after the rating agency cut its rating from Ba1 to B1. | |
| Moody's cited "endemic tax evasion", "very ambitious" austerity plans, and the possibility that the EU may force a debt restructuring on Greece after 2013 as reasons for its decision. | Moody's cited "endemic tax evasion", "very ambitious" austerity plans, and the possibility that the EU may force a debt restructuring on Greece after 2013 as reasons for its decision. |
| Greece's finance ministry said the move was "incomprehensible" and called for tighter regulation of rating agencies. | Greece's finance ministry said the move was "incomprehensible" and called for tighter regulation of rating agencies. |
| "Ultimately, Moody's downgrading of Greece's debts reveals more about the misaligned incentives and the lack of accountability of credit rating agencies than the genuine state or prospects of the Greek economy," said the Greek finance ministry in a statement. | "Ultimately, Moody's downgrading of Greece's debts reveals more about the misaligned incentives and the lack of accountability of credit rating agencies than the genuine state or prospects of the Greek economy," said the Greek finance ministry in a statement. |
| "Having completely missed the build-up of risk that led to the global financial crisis in 2008, the rating agencies are now competing with each other to be the first to identify risks that will lead to the next crisis." | "Having completely missed the build-up of risk that led to the global financial crisis in 2008, the rating agencies are now competing with each other to be the first to identify risks that will lead to the next crisis." |
| Solvency test | Solvency test |
| While recognising the "very significant progress" that Greece had made in reducing its deficit, Moody's said in its rating decision that the "task facing officials and managers remains enormous". | While recognising the "very significant progress" that Greece had made in reducing its deficit, Moody's said in its rating decision that the "task facing officials and managers remains enormous". |
| The agency noted in particular that Greece had failed to collect as much tax revenue as planned last year, and this was likely to be a continuing problem due to inadequate manpower at the tax office and "the inevitable resistance to tax compliance among parts of Greek society". | The agency noted in particular that Greece had failed to collect as much tax revenue as planned last year, and this was likely to be a continuing problem due to inadequate manpower at the tax office and "the inevitable resistance to tax compliance among parts of Greek society". |
| Of broader concern to the eurozone as a whole, Moody's was sceptical about the European Union's permanent bail-out facility, planned to come into operation in mid-2013. | Of broader concern to the eurozone as a whole, Moody's was sceptical about the European Union's permanent bail-out facility, planned to come into operation in mid-2013. |
| Statements by European officials suggested that countries like Greece may have to meet a "solvency evaluation", the rating agency said. | Statements by European officials suggested that countries like Greece may have to meet a "solvency evaluation", the rating agency said. |
| If a country fails to demonstrate that it can ever hope to repay its debts, it may be required by its European partners to impose losses on its creditors. | If a country fails to demonstrate that it can ever hope to repay its debts, it may be required by its European partners to impose losses on its creditors. |
| The observation follows similar comments from counterpart Standard & Poor's earlier this month, who said plans to give rescue loans from the EU and IMF senior status meant that private creditors - including bondholders - would be in an even riskier position. | The observation follows similar comments from counterpart Standard & Poor's earlier this month, who said plans to give rescue loans from the EU and IMF senior status meant that private creditors - including bondholders - would be in an even riskier position. |
| Moody's maintained a negative outlook for the country's rating, suggesting a further downgrade is more likely than an upgrade. | Moody's maintained a negative outlook for the country's rating, suggesting a further downgrade is more likely than an upgrade. |
| Greece received a 110bn euros ($154bn, £95bn) bail-out from the European Union and International Monetary Fund in May last year. | Greece received a 110bn euros ($154bn, £95bn) bail-out from the European Union and International Monetary Fund in May last year. |