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S&P Downgrades Greece

Standard & Poor’s slashed its ratings on Greece three notches, making it the firm’s lowest-rated government debt in the world, citing its belief of a higher likelihood of one or more defaults over the next 12 months.
Greece said a decision by Standard & Poor’s to further downgrade the country’s sovereign debt is based on rumors of a default and doesn’t take into account current talks for a second bailout by the European Union and the International Monetary Fund, and the government’s efforts to bring its debt under control.
“In our view, any such transactions would likely be on terms less favorable than the debt being refinanced, which we, in turn, would view as a de facto default according to Standard & Poor’s published criteria,” the agency said.
The downgrade comes at a particularly awkward time for Greece. The government is attempting to persuade legislators to accept a fresh set of austerity measures. At the same time, Germany, the dominant economy in the 17-member euro zone, is proposing that private sector bond holders accept some form of a loss on their Greek bonds as a condition for a broader rescue package for Greece that could approach 100 billion euros.
Greek markets were closed Monday for a holiday.

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