The market continues to trade with strong pessimism on fear of the spreading debt crisis and worsening conditions in Greece. Ahead of George Papandreou's briefing to Cabinet today on new budget cuts and asset sales the markets are wary that the nation will be forced into restructuring at least, that is if they were not forced to drop the euro.
Renewed jitters were sparked by Fitch's Friday decision to cut Greece's credit rating by three notches further lowering their status into JUNK. The agency said an extension of the maturity of existing bonds would be considered by Fitch to be a default event and Greece and its obligations would be rated accordingly.
The credit rating was cut to B+ with a negative outlook. Fitch said that implementation and political risks have increased with further austerity measures looming for the nation to meet the 7.5% budget deficit to GDP target for 2011 while warning of possible more downgrades if the EU and IMF do not provide the support needed for Greece.
Fitch said In the absence of a fully funded and credible EU/IMF program, the rating would likely fall into the 'CCC' category indicating that a Greek sovereign debt default was highly likely.