S&P downgrades Greece again to BB-, credit watch negative

Greece downgraded from BB+ to BB-.  This shouldn't really be a surprise.  What is a surprise is that once these actions begin, people think they will be short lived.  Such is almost never the case.  Via S&P:

•The concluding statement of the European Council meeting of March 24-25, 2011, addressing the terms under which EU sovereigns may borrow from the European Stability Mechanism (ESM) confirms our previously published expectations that (i) sovereign debt restructuring is a potential pre-condition to borrowing from the ESM, and (ii) senior unsecured  government debt will be subordinated to ESM loans.
•Both features are, in our view, detrimental to the commercial creditors of EU sovereign ESM borrowers and represent a major departure from the decision to make European Financial Stability Facility (EFSF) issuance pari passu with commercial debt.
•Given Greece's persistently significant borrowing needs, we believe that it is highly likely that Greece will access the EFSF and, thereafter, the ESM.
•Consequently, we are lowering our long-term sovereign credit rating on Greece to 'BB-' from 'BB+'. We are keeping the long-term sovereign rating on CreditWatch negative and placing the 'B' short-term sovereign rating on CreditWatch negative, reflecting our view of the risk of a higher-than-expected general government deficit in 2010 and further near-term fiscal deterioration in 2011.


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