Moody’s cuts Greece rating to A3

Ratings agency Moody’s cut Greece’s sovereign credit rating by a single notch to A3 from A2 yesterday and placed it on review for a further possible downgrade, spurring speculation that the government may turn to the European Union and International Monetary Fund for help as soon as today. «Although the Greek government appears to be on, or even ahead of, schedule in terms of the implementation of the actions laid out in its stability and growth program, the difficult macroeconomic and financial environment has made continued adherence to the program considerably more challenging,» said Sarah Carlson, Moody’s lead analyst for Greece. The rating downgrade and soaring bond spreads may push the Greek Finance Ministry into activating the 45-billion-euro aid mechanism today, business websites reported late yesterday. Talks between the Greek government and representatives of the International Monetary Fund and the European Union got under way midweek in Athens. The discussions are widely expected to end with Greece moving to activate the joint rescue plan designed to provide around 30 billion euros in loans from fellow eurozone countries at a rate of around 5 percent over three years, with the IMF seen kicking in an additional 15 billion euros. The cut leaves Greece’s rating by Moody’s at the same level as South Africa. Moody’s is the second ratings company to lower Greece’s grade this month. Fitch Ratings reduced the country two steps to BBB- in early April, three levels lower than Moody’s and one level above junk. Standard & Poor’s classes Greece at BBB+, one step below the Moody’s rating.

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