Fitch Downgrades Greece, Warns ‘Even Soft Restructuring Of Greek Debt Means DEFAULT’

Sunday, May 22, 2011
By Paul Martin

Fitch cuts Greece, warns against ‘re-profiling’

By William L. Watts
MarketWatch.com

LONDON (MarketWatch) — Fitch Ratings lowered Greece’s credit rating further into junk status Friday, and warned it would consider any attempt to extend the maturities of Greek sovereign debt to be a default.

The agencv cut Greece’s long-term rating to B-plus from BB-plus and placed all ratings on Rating Watch Negative, citing the scale of the nation’s fiscal task as it attempts to achieve solvency and provide a foundation for economic growth.

The move comes on growing speculation — and a widening rift among European policy makers — over some type of restructuring of Greece’s sovereign debt.

The euro /quotes/comstock/21o!x:seurusd EURUSD -0.07% extended a loss against the dollar to change hands at $1.4174 in recent action, a drop of 1% from Thursday.

Risks have risen as Greece must implement further austerity measures in order to meet its deficit-reduction goals, Fitch said.

An emphasis on privatization runs the risk that conditional funds from the European Union and International Monetary Fund could be held up if Greece runs into political and technical obstacles to plans to sell 50 billion euros ($71.2 billion) worth of assets by the end of the year, the company said.

In a statement, the Greek finance ministry said the decision ignores the government’s additional commitments to meet its 2011 fiscal targets and to accelerate its privatization program.

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