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OVERVIEW

  • Liquidity constraints have narrowed the timeframe during which Greece’s new government can reach an agreement with its official creditors on a financing programme, in our view.
  • We believe the potential uncertainties surrounding the timing and success of such an agreement risk exacerbating deposit outflows, depressing investment, and weakening tax compliance.
  • As a result, we have lowered our long-term rating on Greece to ‘B–’ from ‘B’.
  • The long- and short-term ratings remain on CreditWatch negative.

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London, 01 August 2014

Moody’s Investors Service has today upgraded Greece’s government bond rating by two notches to Caa1 from Caa3. The outlook on the rating is stable. Greece’s short-term debt rating is unaffected and remains Not Prime (NP).

The rating action was triggered by the following key factors:

  • The significant improvement in Greece’s fiscal position over the past year and the rating agency’s view that the government remains committed to fiscal consolidation underpin Moody’s forecast of a gradual decline in the public debt to GDP ratio, which Moody’s expects to peak this year and then start to fall from 2015.
  • The improvement in Greece’s economic outlook, based on both a cyclical recovery and the progress made in implementing structural reforms and rebalancing the economy, further supports the downward trajectory of the public debt ratio.
  • The government’s reduced interest burden and lengthened maturities of the debt, which is predominantly owed to official creditors, adds to fiscal flexibility and reduces refinancing risks.

Concurrently, Moody’s has raised the local and foreign-currency country ceilings for long-term debt and deposits to Ba3 from B3. The foreign-currency country ceilings for short-term debt and deposits remains Not Prime (NP).

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  • Greece has completed a distressed debt buyback.
  • Following completion of the transaction, we are raising our long- and short-term sovereign credit ratings on Greece to ‘B-/B’ from ‘SD’ (selective default).
  • The upgrade reflects our view of the strong determination of European Economic and Monetary Union (eurozone) member states to preserve Greek membership in the eurozone.
  • The outlook on the long-term rating is stable, balancing our view of the government’s commitment to a fiscal and structural adjustment against the economic and political challenges of doing so.

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S&P: Greece Ratings Lowered To ‘SD’ (Selective Default)

  • We are lowering our sovereign credit ratings on Greece to ‘SD’.
  • This follows the Greek government’s Dec. 3, 2012, invitation to private sector bondholders to participate in a series of debt buyback auctions, which under our criteria we view as a selective default.
  • When the buyback is consummated (which we understand is scheduled to occur on or about Dec. 17, 2012), we will likely consider the selective default to be cured and raise the sovereign credit rating on Greece to the ‘CCC’ category.

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source: trasparency.org

Transparency International has consistently warned Europe to address corruption risks in the public sector to tackle the financial crisis, calling for strengthened efforts to corruption-proof public institutions.

Denmark, Finland and New Zealand held on to their top slots in the ranking, while Afghanistan,North Korea and Somalia remained at the bottom.

Greece is ranked the most corrupt country in the 27-nation European Union.

source: bloomberg