Moody’s Investor Services downgraded Greece to Caa1 from B1 and raised the prospect of a default to an even 50 percent. The European Union is currently working on a second bailout plan that may include debt re-profiling where investors are asked to reinvest in new Greek debt when existing bonds mature.
“Taken together, these risks imply at least an even chance of default over the rating horizon,” Moody’s said in a statement. “Over five-year investment horizons, around 50 percent of Caa1-rated sovereigns, non-financial corporate and financial institutions have consistently met their debt-service requirements. Around 50 percent have defaulted.”
Source: Bloomberg