Fitch ratings agency on Wednesday slashed its rating for Greek sovereign debt to “C” from “CCC,” indicating that default is “highly likely in the near term.”
The downgrade comes just after the country secured a second bailout from its creditors and the subsequent announcement by the Greek government that private investors holding Greek debt would be forced to accept a debt swap, in which they exchange their bonds for lower-value debt.
“In Fitch's opinion, the exchange, if completed, would constitute a 'distressed debt exchange' (DDE) in line with its criteria and consequently yesterday's announcements set in motion the agency's process for reviewing Greece's issuer and debt securities ratings,” Fitch said in a statement.
Fitch said it would review its stance on Greece again once the debt swap had been completed.
"Shortly after completion of the exchange with the issue of new securities, Greece's sovereign rating will be moved ... and re-rated at a level consistent with the agency's assessment of its post-default structure and credit profile," the statement said.