Moody’s rating agency has downgraded Greece’s credit rating further into junk territory over growing uncertainty about the country’s ability to make its debt payments.
On Thursday, Moody’s slashed Athens’ rating to Caa2 from Caa1 and assigned it a “negative” outlook.
The rating is just two steps away from the level signaling that a default is imminent.
The rating agency said that talks between the debt-ridden country and its international lenders, including the International Monetary Fund (IMF), show “no immediate prospect of agreement being reached on a new financing package.”
The rating reflects the agency’s overview of the economic, financial, and political risks in the country.
To meet the challenges caused by its debt, “Greece will need higher medium-term growth and political resolve,” Moody’s said.
“Recent events make both doubtful, raising further concerns over Greece’s ability to sustain financial support from official creditors over the coming years,” the agency said.
Moody’s said that the outcome of the talks would be determined primarily on a political level between the sides.
Debt-ridden Greece is in talks with the European Union (EU), the IMF and the European Central Bank (ECB) to receive the last tranche of its bailout – worth EUR 7.2 billion (USD 7.8 billion) – to help Athens avoid default and a possible exit from the European Union (EU).
The government of Prime Minister Alexis Tsipras, whose leftist Syriza Party stormed to victory in January 25 elections, has tried to renegotiate the terms of the country’s bailout, which Athens had received in return for imposing harsh austerity measures.
Athens received two bailouts in 2010 and 2012 worth a total of EUR 240 billion (USD 272 billion) from the troika of international lenders following Greece’s 2009 economic crisis.
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