Fitch cuts Greece's rating to CCC on eurozone exit risk

London: International ratings agency Fitch has cut Greece’s credit rating from B- to CCC, citing the “heightened risk” that Greece could leave the eurozone.

The failure by Greek politicians to form a government underscores a lack of public and political support for an austerity program, Fitch said in a statement explaining the cut to Greece’s long-term foreign and local currency issuer default ratings.

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Should new elections fail to result in a mandate for a new government to continue austerity measures, a Greek exit from the monetary union would be “probable,” Fitch said.

“A Greek exit would likely result in widespread default on private sector as well as sovereign euro-denominated obligations, despite a moderate sovereign debt service burden following the restructuring of Greek government bonds in March,” the statement said.

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Recent parliamentary elections and subsequent failure to form a government underscore the lack of public and political support for the austerity plans in Greece, the agency said in a statement, explaining the downgrade, Xinhua reported on Thursday.

Greece would likely have to exit from the eurozone if the country failed again to form a government after the new general elections 17 June.

Fitch forecast a Greek exit would result in widespread default on private sector as well as sovereign euro-denominated obligations.

Fitch uses intermediate +/- modifiers for each category between AA and CCC, which denotes: currently vulnerable and dependent on favourable economic conditions to meet its commitments. AA denotes quality companies, a bit higher risk than AAA.

Agencies