The credit ratings agencies are notorious for being reactionary and calling problems long after the issues have already begun.  Now this morning came a call from Standard & Poor’s attacking Greece all over again with a downgrade to “B/C” ratings after increased sentiment of extending maturities.  S&P believes that an extension would lead to comparability issues between government and commercial creditors and that in turn would lead to a distressed exchange.

The rumors from Friday about Greece leaving the Euro have been heavily refuted, but the new calls are that creditors will either push out maturities or that they will lower rates on its sovereign debt.  The big fear is over potential principal writedowns in the sovereign debt.  That might be the alternative to printing money like the country used to do.

S&P has a CreditWatch ‘negative; rating as well, which it is expects will be resolved in 3 months.  Unfortunately for Greece, the out was left in for more downgrades in the future as well.

Greece has already accused S&P of being unjustified and ruthless in its timing on the call as not being based on fresh and accurate data.

As you would expect, this has ADR shares of National Bank of Greece SA (NYSE: NBG) down 0.7% at $1.39 on nearly 1.8 million shares after about 35 minutes of trading.

If you are holdings debt in the other nations under the PIIGS status, particularly Portugal, Spain, and Ireland, chances are you have to be thinking that if S&P will cut Greece after Friday’s rumors and the weekend news that more negative reviews are headed their way too.

JON C. OGG

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