ECONOMY

Moody’s sees likely ratings cut on gov’t debt

Ratings agency Moody’s said yesterday there is a «greater than» 80 percent chance it will cut its rating on Greece’s debt again as the government struggles to push through measures to reduce its budget deficit. «A multi-notch downgrade is likely,» Moody’s said in a statement. The ratings company, which cut Greece to A3 from A2 last month, said that any upgrade is «unrealistic in the foreseeable future.» The debt crisis in Greece and the danger it may spill over to other indebted euro-area nations prompted the bloc’s governments to unveil earlier this week an unprecedented financial lifeline with the International Monetary Fund of almost $1 trillion. Standard & Poor’s cut Greece’s credit rating in April three steps to junk, marking the first time a euro member lost its investment grade since the currency’s 1999 debut. «The specific magnitude of the downgrade depends on the likelihood that Greece adheres to the conditions of the euro area/IMF package and the levels at which debt will stabilize or reverse,» Moody’s said. «The scale of the current fiscal austerity program has increased political risk, as the Greek population is being asked to accept very demanding conditions.» Meanwhile, Greece led a jump in the cost of insuring against losses on government bonds after Josef Ackermann, Deutsche Bank AG chief executive, said he doubted whether the nation would be able to pay its debts in full. Swaps on Greece jumped 59.5 basis points to 588.5, Portugal increased 28 to 229, Spain rose 20 to 175, Ireland climbed 20 to 190 and Italy was up 10.5 at 140 basis points.