Standard & Poor’s knocked Greece down a whopping three notches in its latest credit rating today, saying a default was "increasingly likely." Greece’s new rating—CCC—is the lowest of any country in the world, standing just four steps above default, Reuters reports. What’s worse, the agency said its outlook was negative, meaning that the rating is more likely than not to fall again in the next 12 to 18 months.
S&P believes that European policymakers will likely impose a restructuring of Greek debt on terms unfriendly to bondholders. Moody’s has Greece rated just one step higher. “The ratings agencies are now playing catch up with the market,” one analyst tells Bloomberg. “The market is pricing in a very high probability that there will be a credit event around Greece. The agencies are just catching up to the negativity that’s already priced in by the market, not the other way around.” (Read more Standard & Poor's stories.)