Moody's: Greek Default 'Virtually Certain'
But EU effort means country will likely stabilize
By Newser Editors and Wire Services
Posted Jul 25, 2011 6:27 AM CDT
Greek Prime Minister George Papandreou, left, talks with Greek President Karolos Papoulias during their meeting in Athens, on Friday, July 22, 2011.   (AP Photo/Petros Giannakouris)
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(Newser) – Moody's downgraded Greece's bond ratings by a further three notches today and warned that it is almost inevitable the country will be considered to be in default following last week's new bailout package. The agency says the new EU package of measures implies "substantial" losses for private creditors. As a result, it cut its rating on Greece by three notches to Ca—one above what it considers a default rating.

Though Moody's said a Greek debt default is "virtually certain," it noted that the new measures will increase the likelihood that Greece will be able to stabilize and eventually reduce its overall debt burden. It also said the package also benefits other eurozone countries by "containing the near-term contagion risk that would likely have followed a disorderly payment default or large haircut on existing Greek debt."