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Greek Ratings Freefall at 30 Times Average Rate, Evolution Says

The Greek National Flag Flies At The Foot Of Acropolis hill
Greece entered a league of debt-market pariahs when Moody’s Investors Service downgraded its credit rating to Caa1, leaving only Ecuador as a worse sovereign risk. Photographer: Kostas Tsironis/Bloomberg

Greece’s credit rating is tumbling at almost 30 times the average speed after it was cut three levels to Caa1 by Moody’s Investors Service, according to Evolution Securities Ltd.

It typically takes 15,741 days for an issuer to follow the downgrade path Greece has traversed since it was cut to A2 in December 2009, the London-based broker said in a note today. That compares with the 526 days it has taken the nation to make the journey, Evolution said.

“Statistically, the faster the rating goes down, the more likely the issuer is to default,” said Brian Barry, an analyst at Evolution in London. “You don’t have to be a mathematician to see the scale of the problems faced by Greece.”

Greece has a 50 percent chance of defaulting, Moody’s said yesterday, citing the risk it will be unable to stabilize its finances and have to restructure debt. Greece faces a funding gap of about 30 billion euros ($43 billion) next year and is shut out of the capital markets with yields on its 10-year bonds of more than 16 percent.

Standard & Poor’s rates Greece B, two levels higher than Moody’s, and has said it may cut the grade. Fitch Ratings is also reviewing its B+ rating, a step higher than S&P, for a possible downgrade.

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