UPDATE 1-S&P cuts Greek rating to junk, outlook negative

* Greece loses S&P investment grade, further cuts possible

* Agency cites doubts over handling of debt mountain

* Greek assets shed more after downgrade

(Adds market reaction, details)

NEW YORK/ATHENS, April 27 (BestGrowthStock) – Standard & Poor’s
downgraded Greek bonds into junk territory on Tuesday, citing
concerns about the euro zone member’s ability to implement
reforms to slash its massive debt.

Greece has suffered multiple ratings downgrades since its
fiscal crisis started in October but this is the first time that
an agency cut its debt to junk status, increasing pressure on
already record high Greek bond yields.

“It’s an indication of the continued uncertainty over
Greece’s prospects and particularly the uncertainty over when
and whether it will actually receive the rescue package that the
ECB and the IMF have been discussing,” said Jonathan Loynes,
economist at Capital Economics.

S&P cut the rating by a full three notches to BB-plus, the
first level of speculative, or junk, status. The outlook is
negative, meaning the agency could downgrade Greece again.

“(This) results from Standard & Poor’s updated assessment of
the political, economic, and budgetary challenges that the Greek
government faces in its efforts to put the public debt burden
onto a sustained downward trajectory,” S&P said in a statement.

The spread between Greek 10-year government bonds and
benchmark German bunds widened to a fresh 12-year high of 718
basis points after the rating cut.

Two-year benchmark euro zone government bond yields fell to
a euro lifetime low as investors sought a safe haven after the
Greek downgrade and an S&P downgrade of Portugal’s credit rating
by two notches to A-minus. European shares fell at their fastest
rate in more than two months.

The downgrade put Greece on par with Romania and below
Kazakhstan, Hungary and Iceland, the last of which rocked global
markets when its main banks imploded at the start of the global
financial crisis.

S&P also assigned a recovery rating of ‘4’ to Greece’s debt
issues, indicating its expectation of “average” (30-50 percent)
recovery for debtholders in the event of a debt restructuring or
payment default.

The agency lowered its ratings on four Greek banks following
its downgrade of Greece’s sovereign rating. [ID:nWNA9648]

Moody’s Investors Service cut Greece’s sovereign debt to A3
on Thursday and said it was likely to reduce the rating further
unless the deficit-stricken government restored market

Fitch Ratings cut Greece’s credit rating to BBB-minus
earlier this month, its lowest investment-grade rating, and
signalled further downgrades are possible. [ID:nWNA7955]

Growth Stocks

(Reporting by Ciara Linnane in New York and Ingrid Melander in
Athens; Additional reporting by Mike Winfrey; Editing by Susan

UPDATE 1-S&P cuts Greek rating to junk, outlook negative