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S&P cuts Greece's credit rating in another blow to the government

Standard & Poor's cut Greece's credit rating today because the ratings agency said the nation's spiraling debt problem may be beyond the government's ability to control.

S&P lowered Greece's credit rating one level, from A- to BBB+. The Greek government was put on "CreditWatch negative," which signals that another ratings cut may be in the offing. Fitch ratings agency had downgraded Greece to BBB+ on Dec. 8.

This has a death-spiral feel to it: Greece's ability to pay off its debts depends on the government getting loans at good rates -- which it can't get because its debt rating is getting cut. With each credit rating cut, yields rise on government debt.

Here's a piece I wrote earlier this month on the sovereign debt problems spreading across the Middle East and Europe, from Dubai to Greece to Spain.

“The downgrade reflects our opinion that the measures the Greek authorities have recently announced to reduce the high fiscal deficit are unlikely, on their own, to lead to a sustainable reduction in the public debt burden,” S&P credit analyst Marko Mrsnik said in the statement.

-- Frank Ahrens
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By Frank Ahrens  |  December 16, 2009; 1:43 PM ET
Categories:  The Ticker  | Tags: Fitch, Greece, Standard & Poor's, sovereign debt  
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