Yet One More Credit Ratings Agency Downgrade For Greece

As if you didn’t know that Greece and other nations classified as PIIGS were in trouble, and as if you did not know that ratings agencies are busy slashing ratings almost daily or weekly in these nations, Fitch joined in on the rating downgrade game today.  Fitch cut Greece’s issuer default ratings deeper into junk-rating territory.  This downgrade was by 4 notches.

The long-term foreign and local currency issuer default ratings have now been slashed to “CCC” from an already weak “B+” rating.

Today’s downgrade reflects an absence of a new and fully funded E.U. and I.M.F. aid program and is also over more uncertainty over the role of private creditors.  Greece’s poor economic outlook, of course, was a contribution as well.   Fitch believes that additional funds will be required that would not otherwise come until 2012 and Fitch expected these issues to be resolved earlier.  The notion that funding is conditional only if it can fund through the end of 2013 is another issue.

Is there any huge shock today?  We have warned over and over that more downgrades for more PIIGS, and possibly for those who get pulled deeper into the mess of the PIIGS, will be coming down the pipe.

The vicious cycle has already started, ratings agencies are issuing downgrades which only lead to rival downgrades, which only create even more problems.  The inevitable is still under development.

JON C. OGG