Chances Of Greek Sovereign Default Rise, Says Study @ Forex Factory
Chances Of Greek Sovereign Default Rise, Says Study: FT
FRANKFURT (MNI) - Greece is now the second riskiest sovereign borrower in the world, according to a recent analysis by the data provider CMA, the Financial Times reported Tuesday.
Over the past three months, Greece has moved from ninth to second most likely to default within the next five years, a study of credit default swap (CDS) markets show.
As of 2Q this year, Greece had a 55.6% chance of default over five years, second only to Venezuela, whose chances stood at 58.7%, the FT wrote, citing the study. This implies a credit rating for Greece of CCC. By contrast, S&P rates the country BB+, though this is junk status, and the agency gives Greece a negative outlook.
In June, ratings agency Moody's slashed Greece's sovereign debt rating by four notches to Ba1 from A3, thus pushing it below investment grade to "junk" status.
Fitch, on the other hand, still gives Greece investment grade status at BBB-, but also with the outlook negative.
Markets have skeptically eyed the Hellenic Republic since late last year, when the new government announced that its deficit in 2009 would be twice as much as originally feared. Its deficit last year was 13.6% of GDP, more than four times the EU's limit of 3%.
Greece will, however, meet its target of cutting the deficit to 8.1% this year, the country's finance minister, George Papaconstantinou assured Monday in Athens.
The European Union and the IMF agreed in April to lend the country up to E110 billion over three years if needed to save it from default.