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S&P: Policy Uncertainty in Greece will Downgrade Credit Rating

tsipras orkizetaiThe Standard & Poor’s rating agency has put Greece on credit watch, citing the possibility that the policies of the country’s new government might trigger a future credit rating downgrade.
“The CreditWatch placement reflects our view that some of the economic and budgetary policies advocated by the newly elected Greek government, led by the left-wing SYRIZA party, are incompatible with the policy framework agreed between the previous government and official creditors,” S&P said in a press release on Wednesday.
S&P warned that “if the new Greek government fails to agree with official creditors on further financial support, this would further weaken Greece’s creditworthiness” and would lead the agency to lower the country’s B/B sovereign debt ratings.
In 2009, S&P downgraded Greece’s credit rating, in a move that contributed to the country’s economic collapse. Greece was the first euro zone country to have its debt rating slashed to junk, despite protests from the European Union. Brussels had blamed the agency for labeling Greece a risky investment and scaring off potential investors.
Greece’s new Prime Minister Alexis Tsipras has pledged to renegotiate the terms of the bailout program without any intention to pull Greece out of the euro zone.

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