S&P Downgrades Greece Rating to 'Selective Default'

Debt-crisis stricken Greece has seen its credit rating by Standard & Poor's slump from CC to SD, or selective default, meaning it allegedly cannot service some of its debts.

According to Standard & Poor's, a credit rating of SD means some parts of debt are serviced, while others are left unserviceable.

In a characteristic move, the downgrade by S&P comes just days after EU Finance Ministers and Greek cabinet representatives negotiated the second, EUR 130 B rescue plan package for Greece.

The credit rating agency quotes an alleged "colossal growth of sovereign debt" in conditions of a global crisis and a "wrong fiscal policy" as grounds for the downgrade.

Greek vice-PM and Finance Minister Evangelos Venizelos, however, dismissed the move as irrelevant and already taken into account.

"The downgrade will have no effect on the Greek banking system, as the Central Bank of Greece and the European Financial Stability Facility have foreseen it and taken all precautions in case of such pressure on liquidity", says a statement by the Greek Ministry of Finance.

All the same, S&P also downgraded its outlook for the EFSF from developing to negative, retaining its credit rating of AA+.

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