Greece`s credit rating cap cut by Moody`s on Euro exit risk
Baku, June 2 (AZERTAC). Greece had its highest possible credit rating lowered by Moody`s Investors Service, which said there`s an increasing risk the country may exit the euro region. Greece`s country ceiling, the highest rating that can be assigned to a domestic debt issuer, was cut to Caa2, Moody`s said in a statement late yesterday in New York. The best rating on any Greek security is currently B1, four levels higher, Moody`s said. A Greek exit from the euro may exhaust official funding sources and rack up direct costs of 360 billion euros ($444 billion), or 3.8 percent of euro-area gross domestic product, Societe Generale SA said yesterday. Greek parliamentary elections on June 17 may drive the risk of an exit higher, according to Moody`s. “If that were to occur, the maximum rating Moody`s would assign to Greek securities would fall further,” Moody`s said in its statement. “Although the risk of a euro exit by Greece is substantial, it is still not what it considers its `central case` or most likely scenario.”
A Greek departure from the euro would land investors with “large losses” because of redenomination of government debt and private debt securities issued under Greek law, Moody`s said. Such a scenario would also lead to “severe disruption” to the nation`s banking system, the ratings company said.
A pledge to scrap the terms of the rescue loans amounts to a bet the European Union and International Monetary Fund will stop short of kicking Greece out of the 17-nation euro. Tsipras has said he`ll try to keep Greece in the euro while pledging to cancel austerity measures.
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