S&P downgrades Greek credit rating to junk status
Global ratings agency Standard and Poor’s has cut its credit rating on Greece further into junk status amid concerns over the European country's cash position.
The agency said Friday it has lowered Greece's long-term rating by one notch to B- and even warned over the country's possible exit from the 19-nation eurozone.
The agency noted that a further downgrade is possible by keeping the country on so-called "CreditWatch negative".
The action "reflects our view that the liquidity constraints weighing on Greece's banks and its economy have narrowed the timeframe during which the new government can reach an agreement on a financing program with its official creditors,” S&P said, adding, "Although the newly elected Greek government has been in power for less than two weeks, we believe its limited cash buffers and approaching debt redemptions to official preferred creditors constrain its negotiating flexibility."
The Greek economy has emerged from a brutal six-year recession. However, the country remains burdened by its debts, which stand at over 170 percent of Greece's annual gross domestic product (GDP).
The developments come as the Greece’s new government has signaled it would not give up on demands to overhaul bailout agreements.
The newly-elected anti-austerity government in Greece rose to power on a pledge to renegotiate the nation’s 240-billion-euro (USD-275-billion) bailout and erase over half of the national debt.
Greek Prime Minister Alexis Tsipras and Finance Minister Yanis Varoufakis have been holding many meetings with European Union leaders and the European Central Bank (ECB)’s authorities this week, hoping to draw the sympathy of allies to Greece's concerns.
Meanwhile, Varoufakis held a meeting on Thursday with his German counterpart, Wolfgang Schaeuble, as Berlin has steadfastly ruled out any debt relief for Greece.
Greece has been relying on international rescue loans since 2010. In exchange for its international loans, Athens has imposed harsh austerity measures that have caused mounting dissatisfaction in the country.
The measures have forced people to endure multiple tax increases, along with cuts in pension and salary, in exchange for the bailout loans by the so-called troika of lenders -- the European Commission, the International Monetary Fund and the ECB.
JR/AS/MHB
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