Tuesday, May 24, 2011

Greek Default Could Make Others Junk: Moody's

Portugal and Ireland would be at risk of multi-notch credit downgrades, pushing their ratings into junk territory in the event of a default by Greece, Moody's EMEA chief credit officer told Reuters on Tuesday.

The Parthenon in Greece
Scott E. Barbour | Getty Images

"A Greek default would be highly destabilizing and would have implications for the creditworthiness of issuers across Europe," Alastair Wilson said in a telephone interview.

"This would result in more highly polarized credit worthiness and ratings among euro zone sovereigns, with the stronger countries retaining very high ratings and the weaker countries struggling to remain in investment grade," he said.

Wilson said that the focus after any Greek default would be on Portugal and Ireland, who have also agreed bailouts with the EU and the IMF.

Asked if Portugal and Ireland would be be at risk of falling into junk territory in case of a Greek default, he said: "Potentially yes ... If there were to be a Greek default there could potentially be multi-notch downgrades to the weakest sovereigns." He said Spain, Italy and Belgium were not in the same category as Portugal and Ireland but would also come under significant market pressure and could face rating downgrades. Read more