Fitch warns of mass eurozone downgrades as frontrunner to lead Greece rails at ‘barbaric’ austerity

Thursday, May 17, 2012
By Paul Martin

All eurozone countries face downgrades to their debt ratings if the risk of a Greek exit rises following next month’s elections, a leading credit agency warned last night.

By Damien McElroy
TelegraphUK
17 May 2012

Fitch Ratings downgraded Greece’s sovereign rating to CCC from B- and sounded a wider alert for the rest of the currency bloc. It said it would put the entire zone on downgrade watch if after June 17′s poll, “Fitch assesses that the risk of a Greek exit from European Monetary Union is probable in the near term.”

The agency said it had cut Greece’s rating to reflect “the heightened risk that Greece may not be able to sustain its membership of EMU”

It said “the strong showing of ‘anti-austerity’ parties in the May 6 elections and subsequent failure to form a government underscores the lack of public and political support for the EU-IMF €173bn programme”.

Should the voters once again reject austerity and structural reform, Fitch said “an exit of Greece from EMU would be probable”. That would be expected to trigger “a widespread default on private sector as well as sovereign euro-denominated obligations”.

The agency’s warning came as the front runner to become Greece’s next leader, Alexis Tsipras, vowed that he would never yield to European demands to impose “barbaric” austerity.

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