Standard & Poor's Ratings Service lowered its outlook on Greece to negative from stable, noting it will be difficult for the government to make further cuts to meet the conditions required to secure the next disbursement of funding from the European Union and International Monetary Fund.
S&P affirmed Greece's sovereign-credit rating at triple-C, eight notches into junk territory, The Wall Street Journal reported.
Noting delays in implementing budgetary consolidation measures and a worsening economy, S&P said it is likely Greece will require additional financing for 2012 under the current EU/IMF program. S&P said Greece's ratings could be downgraded if shortfalls in the country's 2012 deficit and arrears targets are not met by new funding or other relief from the troika made up of the European Union, European Central Bank and the International Monetary Fund.
The firm projects Greece's gross domestic product to contract by 10% to 11% cumulatively during 2012 to 2013, compared with the contraction of 4% to 5% assumed by the EU/IMF program. The deepening contraction of the Greek economy and the deteriation of the country's fiscal position imply a high likelihood the country will need as much as 7 billion euros of additional financing for 2012.
The ratings firm had raised Greece's credit rating to triple-C from selective default in May after the country completed its distressed debt exchange.