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The Greek downgrade the debt crisis reactive

By Marcus Walker and Hannah Benjamin

A credit rating downgrade of Greece brought down the euro and the bonds of indebted countries in the periphery of Europe, as has exacerbated perceptions that the debt crisis in the region is to worsen again.

Standard & Poor's Corp. downgraded the long-term debt of the Greek government from BB-to B, with which Greece has a lower solvency note that many third world countries. S & P said it is increasing the risk that Greece will press its bondholders to accept a late payment on their bonds.

The move helped the euro come down to U.S. $ 1.425 to $ 1.44 at the beginning of the day. Later recovered to U.S. $ 1.4349 in New York, even a modest drop in the day, but significantly below the closing Wednesday, when prices exceeded $ 1.49. The troubled bonds of Greece suffered another settlement, and the prices of other indebted countries in the euro area including Ireland, Portugal, Spain and Italy, also fell.

The recent rise in the English bond yields in Europe is particularly troubling because the country is generally considered a key battleground in the struggle of the region to stabilize its monetary union. The extra yield demanded by investors to take English 10-year bonds rather than German equivalents extremely safe up to more than 2.2 percentage points, up more than tenth of a point from Friday.

Moody's Investors Service, another rating agency risk, he said it was reviewing the creditworthiness of Greece with a view to a possible downgrade, citing the economy and the country's public accounts were weaker than expected.

The Greek debt downgrade by S & P comes as financial markets are increasingly concentrated in the unresolved debt crisis in the euro zone, after months of relative stability in the bond markets in the region. The deterioration of the economy of Greece has reawakened fears that the country may need additional rescue loans and complete restructuring its debt.

A note on the German news site Spiegel Online on Friday that Greece was pondering leaving the euro sparked new fears, even when the news was widely contested by European governments.

On Monday, French and German officials sought to mitigate the growing speculation in the markets and means that Greece could fall into default or leave the euro. In a speech on Europe Day, the French Prime Minister François Fillon stressed the need for "continued solidarity" within the eurozone, particularly troubled countries of the southern suburbs.

Meanwhile, a spokesman for German Chancellor Angela Merkel said the idea that Greece could leave the euro has never been considered seriously and neither is being now. Greece

criticized the S & P cut its rating on Monday, saying there was new evidence to justify such action. S & P said it seemed likely that the key creditors of Greece into the euro zone extend the maturities of debt repayment of its loans of 80,000 million euros for bilateral loans to Greece, and governments may well seek "comparable treatment" of private sector creditors extending the maturity dates of Greek bonds.

A group of senior financial officials talked about the economic bloc to extend maturities in the talks in Luxembourg on Friday, as well as the likelihood that Greece needed almost 30,000 million euros in additional loans next year, according to People familiar with the matter.

But although there is growing recognition in Europe that Greece will need more help, there is no consensus on the extension of maturity, a measure which Germany is defending discreetly but others, including the European Central Bank, are resisting, say these sources.

S & P said an extension of the deadline if it is worse for creditors that the payment of the bonds on the due date is preferable to reduce the amount you owe Greece.

But he added that 50% or more of Greece's debt may ultimately have to be forgiven for reducing the country's debt burden to a sustainable level.

Many economists have suggested for months that a full restructuring of debts of Greece was probably inevitable, given the weak prospects for growth in the country. The government of Greece has about 329,000 million euros in debt, nearly 143% of Gross Domestic Product according to the EU.