Flash Comment - Euro area: Another downgrade for GreeceFlash Comment - Euro area: Another downgrade for Greece
By: Danske Bank
- Moody's yesterday downgraded Greece's government bond ratings by four notches toBa1 from A3. We think that this downgrade should have taken place 6-9 months agoin order to be value adding.
- Even though this is just rating agencies catching up with reality it means that therewill be even fewer potential buyers for Greek government bonds.
- Sovereign spreads for Greece and other PIGS countries are likely to widen today. Thismay however soon be arrested as the ECB steps in and acquires more government bonds.
- We expect to see more downgrades of PIGS countries in the not so distant future.Spain is a good candidate with high ratings despite poor public finances and a bleakeconomic outlook.
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