Greece’s credit rating may be cut again by Standard & Poor’s on concern a worsening economy raises the likelihood the troubled nation will need more support from European Union lenders.

The outlook on Greece’s CCC rating, already eight levels below investment grade, was revised to negative from stable, S&P said yesterday in a statement. The change reflects the risk of a downgrade if Greece is unable to obtain the next disbursement from the European Union and International Monetary Fund rescue package, the rating company said.

Greece’s economy has been squeezed by the fiscal tightening needed to qualify for rescue-loan disbursements, with gross domestic product shrinking for five straight years and unemployment rising to 22.5 percent from 7.9 percent. Finance Minister Yannis Stournaras said yesterday the government is still working on identifying almost a third of the cuts required by international creditors to resume the flow of bailout funds.

Greece may need as much as 7 billion euros ($8.7 billion) in loans this year as gross domestic product shrinks as much as 11 percent in 2012 and 2013, S&P said.

Bond-market history indicates that the utility of sovereign ratings may be limited. Almost half the time, yields on government bonds fall when a rating action by S&P and Moody’s Investors Service suggests they should climb, according to data compiled by Bloomberg on 314 upgrades, downgrades and outlook changes going back as far as the 1970s.

“We see the likelihood of shortfalls, owing to election- related delays in the implementation of budgetary consolidation measures for the current year, as well as the worsening trajectory of the Greek economy,” S&P said in the statement. “As a result of this economic weakness, and due to an absence of progress on tax administration reforms, collection of personal, corporate and indirect taxes is well below target for 2012.”

[Bloomberg]