Standard & Poor's downgrade Greek credit rating to junk status

[Clarke]

Stock markets around the world plunged today after Standard & Poor's cut Greece's credit rating to junk status and downgraded its view of Portugal in the clearest evidence yet that the European sovereign debt crisis is spreading. Italy and Spain are also viewed as vulnerable. In London, the FTSE 100 index closed down more than 150 at 5603, a fall of 2.6%, and there were big falls in share prices in Athens, New York, Paris and Frankfurt. Analysts blamed politicians in Germany for dragging their feet over a Greek rescue package worth €45bn. German chancellor Angela Merkel has demanded that Greece come up with a tougher and longer austerity package before the EU ploughs in €30bn and the International Monetary Fund comes up with €15bn. But investors fear the government will be unable to deliver amid opposition from trade unions who have already taken to the streets. The Greek finance ministry said the downgrade of Greek bonds did not reflect the country's true economic state. "The downgrade does not reflect the true fundamentals of the Greek economy or the progress on the fiscal front," it said. The country faces a critical date on 19 May when it needs to repay €9bn to foreign and domestic investors, but cannot do so by raising funds on the bond markets because the cost of servicing its short-term debt has rocketed to 14%. That has raised the spectre of Greece becoming insolvent which would have serious repercussions for the future of the euro. Today Europe's poorest nation, Portugal, became the latest country to be dragged into the crisis as S&P downgraded its credit rating to A-, reflecting its view of "the amplified risks Portugal faces". Portugal has been widely considered the most likely to suffer if Greece's debt crisis spreads. Its credit default swaps show investors rank its debt as the world's eighth riskiest, worse than Lebanon and Guatemala. Portugal has a higher debt than Greece and the risk-premium on its bonds recently rose to more than double the past year's average. Its finance minister Fernando Teixeira dos Santos admitted that there were "contagion risks". Gary Jenkins, head of fixed income research at Evolution Securities, said: "The longer it takes to get the Greek rescue package together, the worse things will get. Everyone knows that markets hate uncertainty. There is a danger that events could spiral out of control in the absence of decisive action." Economists believe Greece will need more than the €45bn pledged so far. Erik Nielsen of Goldman Sachs said today that rescuing the Greek economy could require €150bn over the next three years. "I suspect some haggling is now going on between the IMF and the eurozone on how they can share the burden of a bigger programme," he said. Steven Major, head of fixed income research at HSBC, estimated Greece would need €110bn over the next two years and that "a longer-term plan was in everyone's best interests". At a meeting of the IMF in Washington at the weekend, finance ministers admitted that €45bn was just the start of what was needed. Greek officials are understood to be pushing for a three-year deal, as the bare minimum. Today, head of the Greek central bank George Provopoulos tried to calm markets by saying spending cuts to achieve "ambitious fiscal targets" was the best option as further increases in tax rates would hurt economic activity which was already slumping. Greece has been living beyond its means in recent years and its rising level of debt – 115% of GDP – has placed a huge strain on its economy and mean investors are wary of lending more. The country's debt stands at €300bn. The FTSE's fall today was the worst day's performance since 26 November last year when worries about debt in Dubai gripped investors. By the time London closed, Wall Street was about 125 points lower, with investors ignoring better than expected US confidence figures as the news of the S&P downgrades filtered through. In France the CAC 40 fell 3.82% while the German Dax ended 2.73% lower. But UK gilts jumped almost a full point to 115.33 while gold hit two week highs as investors sought safe havens. The euro fell around 1% against the dollar to $1.3264, and 0.1% against the pound to 86.60p. =================================================== Too much of borrowing and spending drags the whole world down :whack: btw .. JUNK :hehe:

[Serani]

Going on holiday to Greece, going to aid there recovery by spending vast sums of money.

[punjabi_khota]

these credit rating agencies are a piece of utter **** themselves...some one should downgrade their rating to bull-****. ****ers were hand-in-glove with the banks during crisis, and did jackshit when their 'ratings' were so needed to see the picture.

[flamy]

:((

[Clarke]

these credit rating agencies are a piece of utter **** themselves...some one should downgrade their rating to bull-****. ****ers were hand-in-glove with the banks during crisis' date=' and did jackshit when their 'ratings' were so needed to see the picture.[/quote'] touche, all those A++ ratings were 'junk' to begin with. But this one is more correct than not, considering their current level of debt. Their interest rate on 2 yr bonds is 16%, which is less than 3% in countries like Germany and Britain, surely due to the risk involved: PROBABILITY OF COUNTRIES BEING UNABLE TO PAY BACK DEBT

[achilles]

Doesn't US "train" these companies before they actually shoot off with their junk? Many magazines say that most of the junk circulated around is "motivated news to appease some vested interests to help them run their business" :hmmm:

[Sooda]

^ Comapnies pay these ratings agencies to rate the debt they sell dont they? So even if its a crappy (read: sub prime) debt they hardly going give it a poor rating- theyll give it exactly what the banks want. Investors eyes light up and hey presto, the debts never get repaid and its financial turmoil...

[Sooda]

The cost of borrowing for the Greek government briefly hit 38% in a stark illustration of the impact that a downgrade can have on the health of a nation's finances. Greece has been graded BB+ by the credit rating agency Standard & Poor's, official "junk" territory. It is now on a par with Azerbaijan, Colombia, Panama and Romania. Britain is one of 11 countries with a prized 'triple A' rating, along with Australia, Denmark, Germany, France, the United States and Luxembourg. But it is the only one of the elite to have been put on "negative watch", a warning that it might face a future downgrade. The cost of Greece borrowing on a two-year bond was as little as 1.3% in November, but has risen sharply amid fears of bankruptcy. By the end of tradingtoday, the cost had fallen back to 19%. In contrast, Britain is able to borrow on two-year bonds at a rate of 1.2%. S&P's lowest rating, CCC+, is assigned to Ecuador, which defaulted on $3.2bn of bonds last year.

[Lurker]

Too much of borrowing and spending drags the whole world down :whack: btw .. JUNK :hehe:

Not much to laugh at considering India is not doing much better. Just a rung above Greece really. AAA Australia, Austria, Canada, Denmark, Finland, France, Germany, Netherlands, Luxembourg, the Netherlands, Norway, Singapore, Sweden, Switzerland, UK, USA AA+ Belgium, Hong Kong, New Zealand AA Abu Dhabi, Ireland, Japan, Slovenia, Spain AA- Kuwait, Qatar, Saudi Arabia, Taiwan A+ Chile, China, Cyprus, Italy, Slovak Republic A Bahrain, Czech Republic, Israel, South Korea, Malta, Oman, Trinidad and Tobago A- Aruba, Botswana, Estonia, Malaysia, Poland, Portugal BBB+ Bahamas, South Africa, Thailand BBB Bulgaria, Croatia, Lithuania, Russia, Mexico BBB- Brazil, Hungary, Iceland, India, Kazakhstan, Morocco, Peru BB+ (Junk status) Considered highest speculative grade by market BB+ participants Azerbaijan, Colombia, Egypt, Greece, Panama, Romania http://edition.cnn.com/2010/BUSINESS/04/29/credit.agencies/index.html?hpt=C1 By the way agreed with Khota about these agencies.

[Sachinism]

Doesn't US "train" these companies before they actually shoot off with their junk? Many magazines say that most of the junk circulated around is "motivated news to appease some vested interests to help them run their business" :hmmm:

WTF you guys talking about :hmmm:

[flamy]

WTF you guys talking about :hmmm:

:cantstop:

[Clarke]

Not much to laugh at considering India is not doing much better. Just a rung above Greece really.

The thought of being ahead of an advanced economy (as classified by IMF) would have been obtuse a decade back i suppose. Sure, it has more to do with Greece's fall than our rise, but that's what the thread is about.

[achilles]

^ Comapnies pay these ratings agencies to rate the debt they sell dont they? So even if its a crappy (read: sub prime) debt they hardly going give it a poor rating- theyll give it exactly what the banks want. Investors eyes light up and hey presto, the debts never get repaid and its financial turmoil...

I meant the rating agencies.

[achilles]

WTF you guys talking about :hmmm:

Aye, c'mon now. You know what I'm talking about. Don't go all Azari-manoos on me :hehe:

:cantstop:

:((

[achilles]

Not much to laugh at considering India is not doing much better. Just a rung above Greece really. AAA Australia, Austria, Canada, Denmark, Finland, France, Germany, Netherlands, Luxembourg, the Netherlands, Norway, Singapore, Sweden, Switzerland, UK, USA AA+ Belgium, Hong Kong, New Zealand AA Abu Dhabi, Ireland, Japan, Slovenia, Spain AA- Kuwait, Qatar, Saudi Arabia, Taiwan A+ Chile, China, Cyprus, Italy, Slovak Republic A Bahrain, Czech Republic, Israel, South Korea, Malta, Oman, Trinidad and Tobago A- Aruba, Botswana, Estonia, Malaysia, Poland, Portugal BBB+ Bahamas, South Africa, Thailand BBB Bulgaria, Croatia, Lithuania, Russia, Mexico BBB- Brazil, Hungary, Iceland, India, Kazakhstan, Morocco, Peru BB+ (Junk status) Considered highest speculative grade by market BB+ participants Azerbaijan, Colombia, Egypt, Greece, Panama, Romania http://edition.cnn.com/2010/BUSINESS/04/29/credit.agencies/index.html?hpt=C1 By the way agreed with Khota about these agencies.

I feel vindicated when I say that the big papa's in a national government "govern" these rating companies after going through this list. :bow: USA is AAA despite being sold off almost 80% in bonds to the Chinese and having the worst economic breakdown since 1934? Wow :finger:

[jairamesh]

Anyone catch this, Indian media deliberately manipulating numbers to attack Modi and Gujarat. But these idoits don't realise not only does this harm Gujarat but more importantly India's overall attractiveness for foreign Investment. I am no fan of Modi but this falsifying of data which was published by BBC, Financial Times, Business Standard, CNNIBN etc borders on self-stabbing. Traditional media outlets published Gujarat annual growth rates of 6% over the last 6-7 years, until someone on twitter busted the con-job, that planning commision have published the real rates at 10%!! http://www.firstpost.com/politics/the-gujarat-growth-gaffe-social-media-calls-bluff-296607.html Now not sure how low this filth of a media can stoop to drive their agenda!

[Swing_n_Speed]

these credit rating agencies are a piece of utter **** themselves...some one should downgrade their rating to bull-****. ****ers were hand-in-glove with the banks during crisis' date=' and did jackshit when their 'ratings' were so needed to see the picture.[/quote'] Touche. These crappy credit rating agencies were hands in glove with financial institutions when rating debt instruments. In the CDO and CDS derivative markets how many instruments rated in the A category failed? Why don't these rating agencies rate the creditors first huh? Banks in Europe don't want Greece to default because they own Greek debt. Banks in America don't want Greece to default because it would trigger payments on the credit default swaps they've sold. The solvency of banks on both sides of the Atlantic depends on Europe's most-indebted governments never defaulting on their bonds. Thus screwing innocent Greeks for no fault of theirs. Screw them. Hope the Greeks follow in Icelands footsteps. To hell with the elites and those investors who invested without due diligence. With Sarkozy out of the picture, I hope the Greeks find life a bit easier It really is the 1% of people world screwing over the other 99%.