Ratings Agencies Have Zero Credibility; They Operate for the Benefit of the IMF

S&P Slashes Greece's Credit Rating

May 9, 2011

Fox Business - Standard & Poor’s took another axe to Greece’s credit rating Monday amid fresh fears about how the debt-ridden country will escape from its crisis.

The downgrade further into junk territory comes as European Union officials struggle to reach a consensus on how to solve Greece’s debt crisis and prevent the damage from spreading to other countries that use the euro.

S&P downgraded Greece’s credit rating to “B” and C” from “BB-“ and “B” and left the door open to further cuts by keeping a negative outlook on the rating.

S&P said the move reflects the increasing chance Greece’s euro-zone creditors will extend the maturities on 80 billion euros of bilateral loans to Athens. The likely burden sharing with euro- zone creditors would constitute a distressed exchange, S&P said.

“Even if there were no discount of principal, such an extension of maturities is generally viewed to be less favorable to commercial creditors than repayment according to the original terms of the debt," S&P said in the report.

At the same time, S&P said Greece missed its 2010 fiscal target and achieving its 2011 target “is uncertain.” That outcome, S&P says, means Athens may not be able to raise money from the commercial markets later this year or early next, as had originally been planned.

As a result, S&P said many of Greece’s euro zone official creditors may see a restructuring of official and commercial debt as the best path forward.

To restore Greece’s debt levels to a sustainable level, principal reductions of 50% or more could be needed, S&P predicted.

For its part, Greece said the downgrade was unjustified and not based on fresh data. Greece also questioned the timing of the S&P move.

“Credit rating decisions should be based on objective data, policy-makers' announcements and realistic assessments of the conditions facing an economy," Greece’s finance ministry said in a statement. "Not on market rumors and press reports. When such decisions are based simply on rumors, their validity is seriously cast in doubt."

Shares of Greece stocks and banks, including National Bank of Greece (NBG), were also under pressure.

S&P Cuts Greece’s Credit Rating – AGAIN

S&P warns Greece on restructuring its debt, but has no problem with the US Govt and Fed colluding to restructure America’s debt by inflation. This is why the ratings agencies have zero credibility – they are shills of the federal reserve and its primary policy tool – the US government.

May 9, 2011

Sutton Associates - Standard & Poor’s has again cut Greece’s credit rating, downgrading it by two notches to B as investor expectations of a debt restructuring continue to rise.

The rating is the lowest yet for Greece and is six notches below investment grade. It comes after European officials acknowledged for the first time that Greece’s €110bn rescue package a year ago was insufficient and that further help would be needed.

Strikingly, Greece has now been at a “junk” credit rating from S&P for more than a year. Recent research from the International Monetary Fund shows that every country that has defaulted since 1975 was junk-rated for at least a year beforehand.

S&P cited the increased likelihood of an extension of the debt payment maturities for Greece’s loans from the European Union as a reason for the downgrade, as private creditors would probably be asked to do the same.

“Such private sector burden sharing would likely constitute a distressed exchange according to our criteria, for which we assign a rating of ‘SD’ for selective default,” it added in a statement on Monday.

The US rating agency also kept Greece on credit watch negative, meaning further downgrades are possible.

Market interest rates on Greek debt continued to rise on Monday with the yield on benchmark 10-year bonds rising 0.22 percentage points to 15.73 per cent. That corresponds to a price of about 56, well below the 100 the bondholder would get if he held it to maturity without a default. The yield on three-year bonds rose 0.4 percentage points to 24.21 per cent.

See: U.S. Credit Outlook Cut by S&P on Deficit Concerns

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