ATHENS: The Greece’s long-term foreign and local currency Issuer Default Ratings (IDRs) is downgraded from ‘B’ to ‘CCC’, Fitch statement showed. The issue ratings on Greece’s senior unsecured foreign and local currency bonds are also downgraded to ‘CCC’ from ‘B’. The Short-term foreign currency IDR has been downgraded to ‘C’ from ‘B. The Country Ceiling has been revised to ‘B-‘from ‘BB’.
Lack of market access, uncertain prospects of timely disbursement from official institutions, and tight liquidity conditions in the domestic banking sector have put extreme pressure on Greek government funding. We expect that the government will survive the current liquidity squeeze without running arrears on debt obligations, but the heightened risks have led us to downgrade the ratings.
The damage to investor, consumer, and depositor confidence has almost certainly derailed Greece’s incipient economic recovery. The damage will take time to repair even if prospects for a successful programme completion improve over the coming days or weeks. We have revised down our growth forecast significantly to 0.5% this year from 1.5% in January 2015 and 2.5% in December 2014, with risks to growth on the downside.
