Moody’s cuts Greece credit rating and is set to put default tag on debt

MOODY’S cut Greece’s credit rating further into junk territory yesterday and said it was almost certain to slap a default tag on its debt as a result of a new EU rescue package.

It was the second rating agency to warn of a default after eurozone leaders and banks agreed last week that the private sector would shoulder part of the burden of a rescue deal that offers Greece more cash and easier loan terms to keep it afloat, and avoid further contagion.

“The announced EU programme along with the Institute of International Finance’s statement implies that the probability of a distressed exchange, and hence a default, on Greek government bonds is virtually 100%,” Moody’s said in a statement.