Greek collateral deals negative for rating - Moody's

Monday 22 August 2011

LONDON (Reuters) - A series of agreements forcing Greece to provide collateral in return for aid from foreign governments would be negative for the credit ratings of Greece and other troubled euro zone states, Moody's ratings agency said on Monday.

The agency also said such deals showed a lack of will in some euro zone countries that put more pressure on Germany and France to take stronger steps to support the euro project.

Austria, the Netherlands and Slovakia said on Friday they wanted collateral on their loans to Greece after Finland secured such a commitment, but Greek officials have said they were not talking to countries other than Finland about such a plan.

Moody's warned that the pursuit of such agreements could delay the next tranche of aid for Greece and threaten to cause a default on payments on its debt.

It said a proliferation of collateral agreements would also limit the availability of funds for future bailout programs, and that for these reasons it expected other euro area members ultimately to reject the Finland-Greece deal.

"The tentative Finnish-Greek collateral accord raises concerns about the willingness and ability of some euro area policymakers to implement measures that may prove necessary to preserve the stability of the European Monetary Union," it said.

"This reticence places greater pressure on Germany and France to stake out a strongly supportive stance towards the euro area, with more concrete and immediate effect than the proposals the two countries made last week, in order to shore up the single-currency project."

Greek rating cut sparks fear in eurozone

Tue, Mar08, 2011
By Daily Mail

The debt crisis in the eurozone deepened yesterday after the rating on Greek debt was slashed by three notches.

Greece's credit score was cut from Ba1 to B1 - lower than Egypt and deeper into 'junk' status - by Moody's Investors Services.

It sent a ripple of anxiety through the financial markets and drove up borrowing costs in Europe's most risky economies, including Portugal.

The move also increased pressure on eurozone leaders to ease the repayment terms on emergency loans to Greece and Ireland.

It caused outrage in Athens where the Greek finance ministry called for tighter regulation of the rating agencies which failed miserably in the lead up to the financial crisis.

'Ultimately, Moody's downgrading of Greece's debts reveals more about the misaligned incentives and the lack of accountability of credit rating agencies than the genuine state or prospects of the Greek economy,' said a Greek finance ministry spokesman.

Having completely missed the build-up of risk that led to the global financial crisis in 2008, the rating agencies are now competing with each other to be the first to identify risks that will lead to the next crisis.'

Moody's said 'endemic tax evasion' and 'very ambitious' austerity measures meant Greece may struggle to repay its debts.

Sarah Carlson, Moody's senior analyst for Greece, said the risk of a default 'has materially increased'.

European leaders are at loggerheads over how to deal with the deepening crisis. EU monetary affairs commissioner Olli Rehn said: 'There is a case to reduce the interest rates paid by Greece and Ireland.' But Germany is opposed to such action.

Greek borrowing costs rose to 12.2% while yields on Portuguese bonds hit a record high of 7.5% and Irish debt was at 9.27% - similar to when it was rescued in November.

Greece raises 1.625 billion euros in six-month treasury bills auction

Tue, Mar08, 2011 21:38:55

ATHENS, March 8 (Xinhua) -- Greece on Tuesday raised an additional 1.625 billion euros (2.27 billion U.S. dollars) in six-month treasury bills at an interest rate slightly higher than that of the February auction, the Public Debt Management Agency reported.

The sale followed a new Moody's downgrade of Greece's credit rating on Monday, which fueled a strong reaction from the Greek government, as Athens accused international rating agencies of making unbalanced assessments of the ailing Greek economy.

PDMA secured on Tuesday an interest rate of 4.75 percent compared with 4.64 percent in the previous auction this year.

PDMA officials appeared optimistic on the result, noting that initially the target was to raise 1.25 billion euros (1.75 billion U.S. dollars), with some 30 percent of the investors being foreigners.

Greece has conducted a monthly short-term debt auction program since last year as a supplementary to the 110-billion-euro (153.7-billion-U.S.-dollar) aid package secured last May by the European Union and the International Monetary Fund to avoid bankruptcy and overcome a severe debt crisis by 2014.

Tags :bankruptcy, debt crisis, International Monetary Fund

Greek downgrade no threat to euro-German minister

Tue, Mar08, 2011

BERLIN, March 8 (Reuters) - German Economy Minister Rainer Bruederle said on Tuesday that he was not concerned that Greece's latest credit rating downgrade would create new insecurity for the euro.

Moody's slashed Greece's credit rating by three notches on Monday due to an increased default risk, raising the spectre that the distressed euro zone sovereign may have to restructure its debt, perhaps before 2013.

Bruederle also said that Germany's economic recovery would not be by endangered by a series of train drivers' strikes, which union members voted on Monday to step up. (Reporting by Gernot Heller, writing by David Stamp)