Fitch Ratings has downgraded Greece further, indicating that a default is “highly likely”, notwithstanding the country’s latest bailout deal.
The rating agency has dropped the country’s sovereign rating from CCC to C, noting that the downgrade follows Tuesday’s Eurogroup statement on a second financing programme for Greece including ‘private sector involvement’, and a subsequent announcement from the Greek authorities outlining the terms of the proposed exchange of Greek government bonds (including a nominal haircut of 53.5% to the face value of the bonds).
Fitch says that, in its opinion, the exchange, if completed, would constitute a ‘distressed debt exchange’, and so the country’s rating has been lowered indicating that default is highly likely in the near term.
And, after completion of the exchange with the issue of new securities, Greece’s sovereign rating will be re-rated at a level consistent with the agency’s assessment of its post-default structure and credit profile, it says.