Fitch Ratings downgraded Greece's credit rating further into junk status, a move widely anticipated after the country said it will force bondholders who do not voluntarily sign up to a debt swap plan to take a loss on their holdings.
The rating agency cut Greece's credit rating from CCC to C and said the downgrade indicated that default is highly likely in the near term.
The rating action is in line with Fitch's statement on June 6, 2011, which outlined its rating approach to a sovereign-debt exchange, it said.
Fitch will review its stance on Greece again once the debt swap had been completed.
Shortly after completion of the exchange with the issue of new securities, Greece's sovereign rating will be moved out of the 'RD' category and re-rated at a level consistent with the agency's assessment of its post-default structure and credit profile, the rating agency said.
Greek benchmark October 2022 bonds stayed lower after Fitch downgraded the nation's credit rating, while European shares fell.