World Business

Greece rattles markets as Spain downgraded

(Xinhua)
Updated: 2010-04-29 14:54

BEIJING: Global concerns over a potential Greek default and spreading debt problems in the eurozone deepened Wednesday as the country's borrowing costs surged, a day after ratings agency Standard & Poor's downgraded Greece's bonds to junk status, which led to sliding stocks around the world.

The ratings firm Tuesday dropped Greece three pegs to BB+, the first level of speculative status, even below that of Iceland, which rocked global markets when its main banks imploded at the start of the global financial crisis. The outlook is negative, meaning the agency could downgrade Greece again. Moody's Investors Service rates Greece A3, while Fitch Ratings puts it at BBB-.

The most-indebted country in Europe, relative to the size of its economy, has about 296 billion euros of bonds outstanding, and the government is grappling with a budget deficit of almost 14 percent of gross domestic product, according to data compiled by Bloomberg.

In issuing the downgrade, S&P cited the "political, economic, and budgetary challenges that the Greek government faces in its efforts to put the public debt burden onto a sustained downward trajectory."