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10 Feb 2015
Moody's downgrades 5 Greek banks to just above default level, warns of further cuts
FXStreet (Mumbai) - Rating agency Moody's Investors Service downgraded five Greek lenders' ratings to just a couple of notches above the default level on Monday.
The agency cited increased uncertainty of whether the newly elected government of Alexis Tsipras can agree with the nation's creditors in time to meet its liquidity and funding needs, as well as the likely reduction in the Hellenic Financial Stability Fund's (HFSF) capacity to support the banks, as the two main reasons for the decision.
Moody’s stated, "A possible deadlock in the government's negotiations with official creditors could place at risk its own liquidity and funding needs, limiting its ability to support the banks in case of need,”
Moody's said that further downgrades may follow after a deeper look at the individual lenders' liquidity buffers and financial profiles.
The five lenders in question include Piraeus Bank, National Bank of Greece and Alpha Bank which are now rated "Caa2" rather than "Caa1", a mere two notches above the lowest possible mark; and Eurobank Ergasias and Attica Bank, which were cut to "Caa3" from "Caa2", only a single notch above the worst rating, C.
The agency cited increased uncertainty of whether the newly elected government of Alexis Tsipras can agree with the nation's creditors in time to meet its liquidity and funding needs, as well as the likely reduction in the Hellenic Financial Stability Fund's (HFSF) capacity to support the banks, as the two main reasons for the decision.
Moody’s stated, "A possible deadlock in the government's negotiations with official creditors could place at risk its own liquidity and funding needs, limiting its ability to support the banks in case of need,”
Moody's said that further downgrades may follow after a deeper look at the individual lenders' liquidity buffers and financial profiles.
The five lenders in question include Piraeus Bank, National Bank of Greece and Alpha Bank which are now rated "Caa2" rather than "Caa1", a mere two notches above the lowest possible mark; and Eurobank Ergasias and Attica Bank, which were cut to "Caa3" from "Caa2", only a single notch above the worst rating, C.