We have said it before and we are going to say it again: Greece (and the bulk of the rest of the PIIGS) have not seen their last credit rating downgrades. Echo: Greece has not seen its last downgrade. One day that will not be the case but one day is a long way off.
S&P’s case is simple. Delays in budget consolidation, a worsening Greek economy, the likelihood of additional financing needed in 2012 under the IMF program, the difficulty of exacting those budget and spending cuts, and more. This is the possibility of a downgrade if Greece fails to secure its next round of funds. The CCC/C ratings on the foreign and local currency credit ratings on Greece are effected.
Did we tell you this is not the last effort to downgrade Greece? Our take is that Greece is still on the path to the return of the Drachma, but that is still not the official word out of Europe yet.
Stay tuned…
JON C. OGG
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