Moody's cut its rating on Greece to 'Caa3' from 'Caa2' as the country became the first developed economy to default on a loan with the International Monetary Fund.
Moody’s cut its rating on Greece to ‘Caa3’ from ‘Caa2’ as the country became the first developed economy to default on a loan with the International Monetary Fund.
Moody’s said the likelihood of Greece obtaining support from its creditors had fallen since the ratings agency’s prior review of the country in April.
“Without support from official creditors, and the economic and fiscal reforms needed to retain that support and to place its own finances on a more sustainable footing, Greece will default on its privately held obligations at some point, the ratings agency said in a statement.
Concerns around a Greek exit from the euro common currency have led to an uneasiness in the financial markets, as the country’s membership in the 19-nation currency bloc remains uncertain.
Greece, which defaulted on a 1.6 billion euro IMF loan, is on course for a referendum at the weekend at which its citizens will vote on whether to accept the austerity terms of continued international aid.
The downgrade follows similar ratings actions at Fitch and Standard & Poor’s.
Moody’s also placed the country’s rating on review for a further downgrade, which would most likely take place in the event of a negative outcome in the referendum.
The latest news on Greece’s financial woes (all times local):
President Barack Obama and Italian Prime Minister Matteo Renzi are discussing ways to keep Greece in the eurozone.
The two leaders spoke by phone on Wednesday. The White House says Obama and Renzi agreed it’s important to help Greece pursue reforms and financing that will create growth and debt sustainability while staying in the currency union. The leaders also discussed how they’re monitoring broader financial markets amid the crisis in Greece.
Greece has suffered its fourth ratings downgrade this week, as Moody’s investors service slashed the country’s rating from Caa2 to Caa3, or just above default.
The agency said Wednesday Greece was likely to default on its remaining privately held debt due to its impasse with lenders.
”Events of recent months have illustrated the distance between what Greece’s official creditors will demand as a condition of continued support over the coming years, and what Greece’s institutions are able to do to meet those demands,” it said.
”This creates significant difficulties for the achievement of a long-lasting support agreement,” it added.
Greek Finance Minister Yanis Varoufakis says a deal with lenders could be reached after Sunday’s referendum, while blaming creditors for the country’s bank closures.
”This is a very dark moment for Europe. They have closed our banks for the sole purpose of blackmailing what? Getting a ”Yes” vote on a non-sustainable solution that would be bad for Europe,” he said in a live interview broadcast on state-run TV Wednesday,.
Despite openly disagreeing with other eurozone ministers, Varoufakis said the two sides remain ”very close” on cost-cutting reforms but need to negotiate further to make Greece’s national debt sustainable.
The European Central Bank’s governing council has decided to maintain emergency liquidity funding for Greek banks at the same levels as before, a banking official says.
The ECB has been keeping Greece’s banks on life support while the country’s left-wing government has negotiated for a bailout deal with creditors. Without the money, Greece could default and wind up leaving the euro.
The official said nothing else was decided Wednesday amid speculation that authorities would move to seize Greek bank deposits to ease the country’s debt burden.
He spoke on condition of anonymity because he is not authorized to discuss the bank’s decisions.
He added that the governing council would convene again when deemed necessary.
Greece’s 2.6 million pensioners have been hit particularly hard by the bank closings this week.
Crowds of anxious, elderly Greeks thronged bank entrances Wednesday, struggling to be allowed to withdraw their maximum of 120 euros ($134) for the week.
Michaelis Kotaras, a 78-year-old retired builder, said the capital controls have made him furious. He says ”before these new controls, my wife and I could live easily. Now I’m anxious about money. And Europe wants to cut my pension still more. I am sure that we are dead as a country.”
Many retirees waited for hours only to be told they would have to come back Thursday or Friday. Others were told their pensions had not yet been deposited.
”The way they treat us is very bad,” said 71-year-old Georgios Petropoulos. ”I worked for 48 years. I want to take my pension whenever I want. Instead I got 120 euros and they said I might get another 120 euros next week – perhaps.”
By one government estimate, retirees’ income has been cut an average of 40 percent since Greece’s financial crisis began in 2009.
Greece’s conservative opposition leader has raised questions over the legitimacy of Sunday’s referendum after the Council of Europe said the poll will fail to meet international standards.
Comments made to The Associated Press by Council of Europe Secretary General Thorbjorn Jagland quickly made headlines Wednesday in Greece. Jagland said the vote was being called too quickly for a true debate on the issue, was being held without international monitors and was posing an unclear question to voters.
In a televised address, conservative leader Antonis Samaras noted that the monitoring group says ”there is no guarantee the democratic conditions are present for the Greek people to express their opinion.”
Greeks will vote Sunday whether to back economic measures that creditors have demanded in exchange for loans.
The chairman of the euro group says the 19 nations using the euro currency have decided to break off talks on Greece’s financial bailout until after Sunday’s referendum.
Jeroen Dijsselbloem said late Wednesday that ”given the political situation, the rejection of the previous proposals, the referendum which will take place on Sunday, and the recommendation by the Greek government to vote `no’, we see no grounds for further talks at this point.”
The Greek government has promised to reopen banks afterÂ Sunday’s bailout referendum, probably on Tuesday. But will all the country’s savings still be in them?
Capital controls imposed this week have triggered concerns that Athens could follow the example of Cyprus in 2013, where deposits were raided to rescue failing banks.
Greek Finance Minister Yanis Varoufakis, chased by reporters Wednesday as he left the ministry by motorbike, baulked at the idea. He says ”under no circumstances … there is no reason to do this. We are not Cyprus.”Â
European stock markets ended sharply higher following the publication of a letter from Greek Prime Minister Alexis Tsipras to the country’s creditors indicating that his government was ready to accept a large chunk of their proposals.
In the letter sent Tuesday just before Greece’s bailout with European creditors expired and the country failed to make a debt payment to the International Monetary Fund, Tsipras said Greece will accept the demands of creditors in a new program, bar a few changes.
Traders thought the letter could form the basis of a new deal.
The Stoxx 50 index of leading European shares ended up 2.1 percent.
A huge banner that urged Greek voters to reject a bailout deal from the country’s creditors at Sunday’s referendum has been taken down from the front of the Finance Ministry.
The banner, which faced the Greek Parliament and overlooked the Greek capital’s central Syntagma Square, was several meters (yards) in size.
In Greek and English, it said `No to blackmail and austerity.”
Greek Finance Minister Yanis Varoufakis distanced himself from the banner. In a tweet, he claimed it was the initiative of trade unionists ”who did not seek the ministry’s permission.”
German Chancellor Angela Merkel is sticking to her position that there can be no negotiations on a new aid package before Greece holds its referendum.
”I have set out my position and I have nothing to add to it,” she said after meeting with Italian Premier Matteo Renzi in Berlin.
Merkel says her personal relationship with Greek Prime Minister Alexis Tsipras hasn’t suffered and that she backs ”the right of a sovereign state” to make its own decision. However, she adds that it’s equally right for other countries to have their own positions.
Renzi said he thinks a referendum is a ”mistake” but that he respects the will of the Greek people.
Greek Prime Minister Alexis Tsipras said suggestions this Sunday’s referendum will determine whether Greece stays in the euro were wrong.
He says ”whatever the circumstances, the Greek government remains at the negotiating table and will remain there until the end. And it will be there on Monday, immediately after the referendum, with better terms for the Greek side.” he said.
In his televised address, Tsipras rounded on those claiming he had a secret agenda to get Greece out of the euro. They ”are telling a great lie,” he said.
Tsipras also sought to assure Greeks, struggling with shut banks and daily withdrawal limits of 60 euros ($67) a day, he would do what he could to ensure the problems were short-lived.
Greek Prime Minister Alexis Tsipras has vowed to push on with his plan for a referendum this Sunday on the recent proposals from the country’s creditors.
In a televised national address, Tsipras also reaffirmed his support for a ”no” vote in the referendum – which he said would not put Greece’s place in the eurozone or in the European Union at risk.
Tsipras said Europe must stop acting in an ”undemocratic way” and sought to reassure Greeks that their bank deposits were safe.
Bank of England governor Mark Carney has warned the outlook for Britain’s financial stability has ”worsened” because of the crisis in Greece even though Britain has its own pound currency and does not use the euro.
Although Carney said at a briefing Wednesday that British banks and businesses only see ”minimal” direct exposure to the Greek crisis, he said the British economy’s exposure to the 19-nation eurozone is ”considerable.”
Carney noted that HSBC was the only British bank actively involved in the Greek market and that Greek banks also have a ”tiny” footprint in Britain.
French President Francois Hollande is urging an accord with Greece over its debt before a referendum scheduled Sunday instead of waiting until after the result. That stance puts him at odds with German Chancellor Angela Merkel.
Hollande, speaking in Lyon, also said it’s the responsibility of other countries that use the shared currency to keep Greece in the eurozone. The French president said waiting for the referendum raises a risk of turbulence and a ”leap into the void.”
Hollande, one of the few remaining allies of Greece’s left-wing government in the EU, criticized ”intransigent comments” in an apparent reference to Germany’s tough stance.
”It is our duty to keep Greece in the eurozone,” he said. ”That depends on Greece … but it also depends on us.”
The leader of Greece’s powerful Orthodox Church has made an appeal for calm amid concern that public rallies for Sunday’s referendum could trigger ugly political divisions among voters.
Archbishop Ieronymos says Wednesday that ”we must not let the poison of division touch our hearts … It would be a crime commit against future generations.”
Although demonstrations over Greece’s debt crisis have been peaceful of late, the deteriorating economic conditions in the nation of 11 million have created concerns that the mood at rallies could turn ugly.
The archbishop also says ”our country unites all of us, our concern for the present and the future must never divide us.”
Eurozone member Slovenia has criticized Greek government’s handling of the debt crisis, saying its actions have prevented a new bailout agreement with the European Union.
Slovenian Prime Minister Miro Cerar said ”Slovenia is ready to help Greece and Greek people but cannot agree to the Greek government’s maneuvers, which are preventing any constructive agreement at the EU level.”
Cerar says Slovenia’s exposure to Greece’s debt amounted to 3.2 percent of its gross domestic product, the highest besides Greece among the 19 nations that use the shared euro currency.
About 200 retirees have demonstrated outside Greece’s Finance Ministry in central Athens before marching to the Bank of Greece to demand access to their full monthly pensions.
Greece imposed capital controls Monday to prevent a bank run from draining all remaining deposits in Greek banks. The country is holding a referendum Sunday on whether to accept creditor demands in return for rescue loans. Greek banks will remain shut through at least next Monday, and ATM withdrawals have been limited to 60 euros ($67) per day.
Elderly Greeks have been particularly hard hit, because many don’t have bank cards.
About 1,000 bank branches opened across Greece for three days beginning Wednesday to allow retirees to withdraw a maximum of 120 euros ($133) for the week.
Pope Francis is urging prayers for Greece and its people as they weather a ”keenly felt human and social crisis.”
The Vatican spokesman, the Rev. Federico Lombardi, said in a statement Wednesday the situation over Greece’s expired bailout program was ”worrying.” He said the dignity of Greeks must be paramount in any decisions that emerge from the crisis.
He said the pope was urging the faithful ”to unite in prayer for the good of the beloved Greek people.”
The head of the Council of Europe, Europe’s top human rights institution, says Greece’s referendum would fall short of international standards if held as planned on Sunday.
Council of Europe Secretary General Thorbjorn Jagland told The Associated Press that international standards recommend a referendum be held with at least two weeks’ notice to allow sufficient time for discussion, with a clear question put to the people and with international observers monitoring the vote.
Greece’s referendum on whether to accept creditor demands in return for bailout funds was called Saturday, and there has been confusion as to whether the result of a ”no” vote as the government recommends would lead the country out of the 19-nation eurozone.
The vote ”has been called on such a short notice, that this in itself is a major problem,” Jagland said Wednesday. ”And also the fact that the questions that are put to the people … are not very clear.”
The European Commission will submit its assessment of Greece’s demand for a new two-year loan program to the finance ministers of the 19 nations using the euro.
All the finance ministers, including Greece, are holding a teleconference meeting later Wednesday.
Commission Vice-President Valdis Dombrovskis says it’s up to the member countries to decide what action to take, but warns that the Greek request is being considered in ”a different economic situation” than offers last week. That suggests any decision could take time.
Greece’s biggest creditor says the country is likely to be in default for not paying its roughly 1.6 billion-euro ($1.8 billion) debt installment to the International Monetary on Tuesday.
The European Financial Stability Facility says once the non-payment is officially confirmed by the IMF board ”this would constitute an event of default for certain EFSF loans.”
In a statement, the EFSF said its chief Klaus Regling would then have to propose one of three actions to the 19 nations using the euro.
He could suggest that the loan contract be cancelled and demand immediate payment of Greece’s debt and interest, waive the EFSF’s rights for this loan payment, or reserve the right to act at a later stage.
The government in Athens owes the EFSF 130.9 billion euros ($145.9 billion) in loan money.
German Chancellor Angela Merkel is making clear that she wants the International Monetary Fund involved in any new aid program for Greece.
Merkel said making Europe strong in the world and defending its values is a key consideration in deciding whether to launch negotiations on a new bailout ”on the basis of solidarity and responsibility, and involving the three institutions – the European Commission, the European Central Bank and the International Monetary Fund.”
Merkel also said Europe has become stronger over the past five years and that ”we can wait calmly” for the Greek referendum result.
German Chancellor Angela Merkel is insisting that there can be no negotiations on any new aid package for Greece before its referendum on Sunday.
Merkel told the German Parliament on Wednesday that ”the door to talks with the Greek government was always open and will always stay open.” But she said Greece unilaterally ended talks by calling Sunday’s referendum on previous creditor proposals.
She said that was Greece’s legitimate right but that other eurozone countries had their rights, too.
”We will wait for the referendum,” she said. ”There can be no negotiations on a new aid program before the referendum.”
German Finance Minister Wolfgang Schaeuble has rejected suggestions that a new bailout agreement with Greece was possible before Sunday’s referendum.
Schaeuble said Greece’s creditors in the eurozone agreed there was ”no sense” in trying to reach one in a situation where there are constantly conflicting reports on what Greece wants.
He said with Greece’s bailout having expired Tuesday, ”we cannot simply act as though” the program was still in place.
A Greek official has sought to douse suggestions that Greek Prime Minister Alexis Tsipras has caved in to creditor demands.
In a letter sent to creditors proposing a new deal for Greece, Tsipras appeared to make significant concessions in a request for a new bailout deal. The Greek official insisted that press reports he had ”fully accepted the creditor proposal are not true.”
In the letter, Tsipras said Greece is ”prepared to accept” the creditor proposal as it was presented last Sunday by European Commission President Jean-Claude Juncker, subject to some changes.
Those include maintaining the discounted value added tax on Greek islands which creditors had wanted abolished, and to delay some labor reforms until the fall.
Germany’s finance minister has urged Greece to make it clear what it wants from creditors before serious talks on a new bailout can take place.
Finance Minister Wolfgang Schaeuble complained of confusing reports coming from Greece and noted that any discussions to take place will be under ”much more difficult conditions” than previously.
Greece, he said ”must first create clarity as to what it wants, and then we have to talk about it under much more difficult conditions.”
Credit ratings agency Standard & Poor’s reckons a Greek exit from the euro could ”easily weaken the upturn” currently taking place in the eurozone.
Although the agency says the risks of contagion to other eurozone countries are less that in 2010-11, it does warn that a so-called Grexit could ”lead to increased risk aversion among investors, lenders and consumers.”
Thousands of elderly Greeks thronged banks that were opened especially for pensioners who don’t have bank cards, to allow them some access to their money.
Withdrawals are limited to 120 euros ($133) per person for the week.
However, a seeming last-minute decision to serve customers on an alphabetical basis led to confusion and frustration. Many retirees who had waited in line from before dawn were eventually told to return Thursday or Friday.
Greek banks have been closed since Monday as the government imposed strict capital controls to prevent a bank run in the wake of its decision to call a referendum on creditor demands.