Market views Greece’s debt problems as so severe that credit ratings barely matter. That did keep Moody’s from taking negative action on Greece’s sovereign paper.
Perhaps the move is a precursor to what may become a set of new and independent ratings for Greece if it leave the eurozone. Moody’s may be clever enough to prepare for that eventuality so it won’t be caught flat footed.
In a note yesterday, the credit agency wrote:
Moody’s Investors Service announced today that it has lowered its assessment of the highest rating that can be assigned to a domestic debt issuer in Greece to Caa2 based on the increasing risk of a exit by the country from the euro area. The highest rating on any Greek security is currently B1, which is rating assigned to certain covered bonds. Any rating actions taken as a result of the new ceiling will be released during the coming week.
Moody’s added that the exit of Greece is not the most probably case, but the risk is substantial nonetheless.
Douglas A. McIntyre
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