Monday, May 16

Greece hit by new downgrade, EU ponders more help

Their concern about Greece's massive debt signals LONDON - two major credit agencies on Monday, believe new loans to the view that European authorities must do more, avoid help to the country a year after it hardly bankruptcy with a bailout.

Experts from the European Union and the International Monetary Fund were in Greece on Monday on economic reforms check, until the Government promised, in return for euro110 billion ($160 billion) in rescue loans last year. They were also to check if the current bailout is enough as Athens can stand on their own two feet again, when the loan expire in 2013 - a scenario most investors think is unlikely.

Credit-rating agency standard & poor cut Greece bond grade further into junk status Monday, said increasingly likely that Greece would be more time to repay of its bailout loans, and that Greece would be held to negotiate a similar deal on bonds of commercial investors.

S & P downgraded the long-term bonds by BB-b, said that would have Greece finally access to partially by default take in up to 50 percent of the debt. As a result said the agency it Greece again could downgrade in the coming months.

Also credit rating agency of Moody's said it Greece the credit rating on review for a further possible downgrade, referring "the increased uncertainty about the sustainability Greek sovereign debt." had placed on the Monday,

Greek Government called the the downs "unjustified" and based largely on "market rumours and press reports," while Socialist Prime Minister George Papandreou to investors lashed out, which he said were betting on Greek standard.

"Credit default swaps are traded without transparency and threaten to reduce the entire countries and whole societies," Papandreou said. "they are bankruptcy and the resolution of the euro to our." "But their efforts in vain."

Although Greece issued strict austerity measures, has the economic reform and a euro50 billion ($ 73 billion) Privatisation programme announced the slow improvement of public finances.

In particular problems the Government raise revenue through taxes, remains the country in a recession. The result is a gap in the coming years it is estimated that some euro30 billion ($ 44 billion).

"It had already become that Greece probably unable to meet its debt obligations in the next few years without any other help,", said Jane Foley, senior currency strategist at Rabobank international.

"Instead of return on the market next year as the original bailout adopted, now it seems pretty likely that Greece is instead more funding from the EU, questions," she said.

Further measures are probably June, when the EU/IMF assessment is reported the trigger.

"Then we these results will be evaluated," said Martin Kotthaus, spokesman for German Finance Minister Wolfgang Schaeuble, the question of additional help for Greece.

Market jitters the situation with his Greek, French and Italian colleagues, as well as European Central Bank President Jean-Claude Trichet and the EU were called stoked Friday as Schaeuble discussed Monetary Affairs Commissioner Olli Rehn in a meeting Luxembourg Prime Minister Jean-Claude Juncker.

"We think that Greece need further customization program," said Juncker, the also the meetings of the euro area 17 Finance Minister chairs. Trichet on Monday expressed muted agreement with this position.

Still, a EU official Monday said that more help or simple bailout were conditions for Greece far from done deal. Was the official on condition of anonymity because of the sensitivity of the matter speak.

At the meeting, Greek Finance Minister George Papaconstantinou was said his Government had to "strengthen" supply efforts the reforms promised for the bailout, the EU of official said.

If Greece borrow money over ten years now wanted to, would have to more than 15 percent on investors part with their cash get a staggeringly high rate of interest payable. Two year bond, interest rates are still higher - over 25 percent.

This is unsustainable and compares with the 2 to 3 percent, which would have to - pay Germany an incredible difference between countries, the same currency and work under the same monetary policy.

PAPACONSTANTINOU has already asked to extend the loan and the repayment of his country's international creditors, which facilitate conditions of Greece's bailout by lowering interest rates.

But most analysts believe that a further bailout would be only another short-term solution. Debt restructuring - voluntarily or involuntarily - could more efficiently, but bondholders would have to repay more time give Greece or be assumed that their bonds have the same value as if they bought it.

So far, European officials have vehemently denied that a restructuring on the cards let alone discussed before 2013, when one picks up new emergency funds. Investors are skeptical but such denials, because EU officials have breathtaking turns crisis during the past year.

The markets are clearly of the view that Greece its debt in the form of one or the other was restructuring - the yield on the 10-year bond to an another 0.11 percentage points to an amazing 15,62 percent on Monday.

"The chain of events is increasingly show the borders of the EU muddle-through strategy," said Christian Carrillo, analyst at Societe Generale.


Steinhauser of Brussels reported. Juergen Baetz in Berlin, Derek Gatopoulos in Athens and David McHugh in Basel, Switzerland, wore.

Copyright 2011, the associated press. All rights reserved. This material may not be published, broadcast, rewritten or distributed.

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