BUSINESS

Moody's: Greek exit could hurt euro's existence

NEW YORK - Moody's Investors Service said late on Friday that a Greek exit from the euro could pose a threat to the currency's existence.

In addition, developments in Spain's banking sector that may require a European rescue package have negative credit-rating implications for the sovereign, Moody's said in a statement.

"Were Greece to leave the euro, posing a threat to the euro's continued existence, we would need to review all euro-area sovereign ratings, including those of the Aaa nations,» the rating agency said.

A Greek eurozone exit would particularly affect the sovereign ratings of Cyprus, Portugal, Ireland, Italy and Spain, Moody's said.

"Some (other) members of the European Union could also be affected, given the strong financial and trade linkages that exist between the members of the monetary union and the European Union,» Yves Lemay, a Moody's sovereign credit analyst in London, told Reuters.

Greeks head back to the polls on June 17 for a parliamentary election after an inconclusive vote on May 6. If they vote for socialist parties that have rejected the terms of a 130 billion-euro bailout plan, this could ultimately lead to Greece leaving the euro.

Should an agreement between whatever Greek government is formed and its international creditors be reached, Moody's said euro area ratings would generally hold at current levels for the time being.

Greece is rated just above default by Moody's at C, while Standard

Online