Posted on 12/23/2009 11:39:50 AM PST by UAConservative
Moody’s Investors Service on Tuesday became the third major credit rating agency to cut its debt rating on Greece, citing the government’s crumbling finances. But stocks and government bonds rallied in Athens amid relief that the downgrade was not worse.
Greece, facing a government budget deficit next year of more than 12 percent of gross national product, has come under pressure from bondholders and the European Union to bring its finances under control.
The Socialist prime minister, George A. Papandreou, has promised to fix the economy even in the face of resistance from his own supporters. But he has not completely convinced investors that he can shrink the government sector, which employs one of every four working Greeks.
Moody’s cut its rating on Greece’s debt to the lowest level it has assigned to any country in the euro zone, A2, five notches above junk status, but still two notches above the ratings assigned by the rival agencies Fitch Ratings and Standard & Poor’s. Moody’s left open the possibility of another downgrade, saying the outlook on the debt was negative.
Banks led stocks on the Athens composite index 4.1 percent higher in late afternoon trading, while the yield on the 10-year government bond due July 2019 fell to 5.72 percent, from 5.96 percent late Monday. The gap, or spread, between the Greek bonds and similar German bonds — a measure of investor confidence — fell to 2.5 percent from 2.8 percent.
(Excerpt) Read more at nytimes.com ...
Stocks rally as the downgrade was UNEXPECTEDLY mild. Move along now.
A list of Moody's credit ratings.
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