Ratings agency Moody's on Thursday cut Greece's credit rating deeper into junk territory due to uncertainty over whether the indebted country will be able to reach a deal with its international lenders in time to meet upcoming debt repayments.
Moody's said it downgraded Greece's government bond rating to 'Caa2' from 'Caa1' and assigned it a "negative" outlook, reflecting the balance of economic, financial and political risks in the country is "slanted to the downside."
Fitch, Standard & Poor's and Moody's all raised Greece's rating last year as the economy showed tentative signs of getting back on its feet after six years of recession.
But the new leftist government's standoff with its euro zone partners and the International Monetary Fund over reforms needed to unlock remaining bailout funding have clouded the outlook, Moody's said.
"The Greek government and its official creditors remain far apart on key objectives, with no immediate prospect of agreement being reached on a new financing package," Moody's said.
Although both sides desire a deal to avert a Greek default, and the process has taken a new sense of urgency, the agency said the final outcome will be driven primarily by political decisions.