26 Jul 2011

Agency cuts Greece's credit rating

11:15 am on 26 July 2011

Credit rating agency Moody's has cut Greece's rating, warning that a planned debt swap would constitute a default.

The rating was cut another three notches from Caa1 to Ca - just two notches shy of a default rating, the BBC reports.

Moody's says the announced EU programme implies that the probability of a default on Greek government bonds almost certain.

The debt swap would increase Greece's borrowing terms by up to 30 years.

It comes after another rating agency, Fitch, warned that it too expected the deal would mark a "selective" debt default by Athens.

The debt exchange with private sector lenders is part of a comprehensive package announced on Thursday by European leaders to shore up the euro and prevent the Greek debt crisis from spreading to other economies, notably Spain and Italy.