After Standard and Poor’s threatened to downgrade Greece’s BBB+ rating as much as two notices on Wednesday, now Moody’s is coming out with its own threat.
They simply don’t appear confident that Greece can do as it says when it comes to fiscal austerity (which simply means living within their means).
“We have to look at the facts and whether the government of Greece is going to do what it has promised to do,” he said.
“Or if we see, based on evidence, that there is a deviation from the plan, we will change our rating accordingly. So a small deviation would lead to a small downgrade and a large deviation — which we think is unlikely — would lead to a large downgrade,” Cailleteau said.
Moody’s said earlier this month that debt-stricken Greece could face the risk of a multi-notch rating cut if its public finances remained unsustainable. Moody’s currently has Greece’s long-term debt rating at A2 with a negative outlook.
Greece needs to convince markets that it can get its fiscal act together and control its mobs of handout-seekers if it wants to avoid crushing crushing credit downgrades across the board.
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