Standard & Poor's has slashed its credit rating for Greece by three notches to CCC, saying there is a significantly higher probability of a default in the struggling euro zone member.
'The downgrade reflects our view that there is a significantly higher likelihood of one or more defaults, as defined by our criteria relating to full and timely payment, linked to efforts by official creditors to close an emerging financing gap in Greece,' said the rating agency.
It said its estimate of a 30% to 50% recovery of investors' money upon default remained unchanged.
This downgrade may be seen as a shot across the bow to EU plans to force private holders of Greek bonds to participate in a new aid package for Greece by accepting delayed repayment.
European Central Bank executives have argued against any moves that obliged private investors to take part in a Greek bail-out as ratings agencies would likely declare Greece in default, causing unknown dangers for the wider 17-member euro zone.
Irish bond trading to be more expensive
European clearing house LCH Clearnet has lifted its margin requirement on Irish and Portuguese government bonds.
This came after the latest rise in yields, or interest rates, being demanded by investors on bonds from the two countries. The move will make it more expensive to trade Irish and Portuguese government bonds traded by LCH. as traders must find more money up-front.
The margin required on Irish bonds goes up from 65% to 75%, while the figure for Portuguese bonds rises from 45% to 65%.
The yield on Irish 10-year bonds was just under 11.4% this evening.
Clearing houses sit in the middle of a transaction, taking on the counter-party risk when two members trade.
