Standard & Poor’s downgrades Greece’s sovereign credit rating to junk
The Greek government requested that the EU/IMF bailout package be activated. The IMF has said it was “prepared to move expeditiously on this request”.
The size of the bailout is expected to be €45 billion ($61 billion) and it is expected to take three weeks to negotiate, with a payout within weeks of €8.5 billion of Greek bonds becoming due for repayment.
The Greek debt rating was decreased to BB+ (a ‘junk’ status) by Standard & Poor’s amidst fears of default by the Greek government. The Greek government was offering borrowers 15.3% on two-year government bonds.
Standard & Poor’s estimates that in the event of default investors would lose 30–50% of their money. Stock markets worldwide and the Euro currency declined in response to this announcement.