There seems some confusion as to what’s going on with Greece’s debt. First, there’s the view of the market (from the good folks at FT Alphaville:
And then there was this out of Reuters:
ATHENS, Dec 22 (Reuters) – Moody’s Investors Service cut Greece’s debt rating on Tuesday but partially reassured financial markets by saying the country remained far from a crisis, igniting a rally in Greek bonds and bank stocks.
How can this be? Well the article goes on to explain:
The rating agency downgraded Greece to A2 from A1, citing the country’s swelling budget deficit. It was Greece’s third downgrade by a major agency this month; Fitch took action early this month, followed by Standard & Poor’s.
So there was a slight downgrade in the sovereign rating. But then this came in, too:
But Moody’s also made clear it saw little chance of a near-term financing crisis in Greece and that instead, the risks were long-term. Its downgrade was smaller than the two-notch cut which the markets had feared, and its new rating for Greece was still two notches above the BBB+ assigned by Fitch and S&P.
Moody’s was pressured to do something, simply because Fitch and S&P already downgraded the country’s rating and they couldn’t be left behind as the one ratings agency that did nothing. But at the same point, they didn’t want to spook markets. So as a result, we get this haphazard, somewhat opaque, rating and explanation.
In my mind, the chart above speaks a lot louder than the ramblings of a behind-the-curve ratings agency.