Fitch Cuts Greek Rating

Reuters

Fitch pushed Greece's credit rating deeper into junk territory on Friday, warning of even further downgrades if the EU and the IMF do not come up with a credible plan to resolve the country's debt crisis.

One year into its EU/IMF bailout, Greece is struggling with weak revenues and a deep recession, fuelling speculation that it will have to restructure its debt to pull itself out of the fiscal mess that triggered a euro zone crisis.

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"The rating downgrade reflects the scale of the challenge facing Greece in implementing a radical fiscal and structural reform program necessary to secure solvency of the state and the foundations for sustained economic recovery," Fitch said in a statement.

The three-notch cut to 'B+' with a negative outlook takes Fitch's rating into "highly speculative" territory, broadly in line with Standard & Poor's 'B' rating and Moody's 'B1' grade. Both have also warned they could drag it deeper into junk.

"In the absence of a fully funded and credible EU/IMF program, the rating would likely fall into the 'CCC' category indicating that a Greek sovereign debt default was highly likely," Fitch said in the statement.

The chairman of the 17-country Eurogroup Jean-Claude Juncker acknowledged for the first time on Tuesday Greece may have to move toward a "soft restructuring" of its debt.

Fitch warned that it would consider any extension of debt maturities -- "soft restructuring" or "re-profiling" -- to be a default event.

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