UPDATE 1-S&P: Greek cut showed agency more upbeat than mkts

(Recasts, add quotes)

TASHKENT, May 3 (BestGrowthStock) – Standard & Poor’s ratings agency
had to slash Greece’s debt rating last week as bond yields
jumped, but the rating still reflected a smaller risk of default
than markets priced in at the time, an S&P official said.

S&P cut Greece’s government debt rating by three notches to
BB-plus, the first level of speculative status and commonly
known in financial markets as junk. [ID:nLDE63P0LU]

“It became quickly apparent that Greece would have increased
difficulty in financing public debt,” as bond yield spreads
expanded, Jean-Michel Six, chief European economist, told an
Asian Development Bank seminar on Monday.

“It took quite a while for the euro zone, the European
Central Bank and IMF to come together and agree on the (rescue)
plan,” he said.

But he said the rating applied by S&P was also meant to show
to debt markets that the risk of default was smaller than bond
yields implied.

S&P defines its BB ratings category as signifying
“obligations for which there is a possibility of investment risk
developing. Capacity for timely repayment of principal and
interest exists but is susceptible over time to adverse changes
in business, economic or financial conditions.”

The agency came under fire for its decision, not least from
the Greek finance ministry, which said the rating did not
reflect the country’s true economic fundamentals.

On Sunday, European finance ministers agreed to a record 110
billion euro ($147 billion) bailout package for Greece.
Growth Stocks

(Reporting by Rie Ishiguro; Editing by Neil Fullick)

UPDATE 1-S&P: Greek cut showed agency more upbeat than mkts