June 14th, 2011
08:49 AM GMT
(CNN) – Greece has hit another low point in the 18 months since its debt problems worried global markets and even threatened the existence of the European Monetary Union.
On Monday, Standard & Poor’s – one of the ‘big three’ credit ratings agencies – cut the ratings of the troubled Mediterranean nation three notches to CCC with a negative outlook. That makes Greece the least credit-worthy country rated by the credit agency and signals the belief that Athens will default on its debt payments.
So if Greece is the worst, who is the second worst? According to the S&P, these are the top 10 nations least likely to pay back debts :
The good news for Greece: Unlike Ecuador and Argentina, it hasn’t recently defaulted on its debt. Ecuador defaulted in 1999 and in 2008; Argentina defaulted in 2001.
S&P’s revised rating comes a week after another Big Three ratings agency, Moody’s Investors Services, downgraded its rating on Greece, saying the nation has a 50-50 chance of defaulting on its debt. (However, Moody’s rates Ecuador even lower than Greece.)
But the risks for the financial world are much larger with the Greek situation, because of the pressure it puts on the 17 nations united under the euro currency. A default from Greece is bound to rekindle fears of possible defaults from other euro nations, like Portugal and Ireland, and reignite the debate on whether the eurozone can survive.
Last year, Greece got $145 billion in aid from the EU and IMF to make its debt payments. Greek press is reporting the country now will seek an additional $58 billion.
Why? To borrow cash in the form of bonds, the market is demanding 25% interest payments for a two-year loan.
On Tuesday European ministers will gather to discuss possible solutions to the ongoing Greek drama. As CNN’s Emily Reuben explains, Germany wants private sector to take a hit with a “soft restructuring,” for example, which will extend Greece’s repayment dates. ECB fears any kind of prescribed restructuring could broaden the crisis.
“We are advising them to have a voluntary scheme (to reduce debt) and to avoid schemes that would trigger a credit event or selective default or default,” Jean-Claude Trichet, head of the European Central Bank, told CNN’s Richard Quest.
The Greek Ministry of Finance, meanwhile, says the reduced rating “ignores the intense consultations taking place currently between the (the ECB and European Commission) and the IMF aimed at designing a viable solution that will cover the financing needs of Greece in the coming years.
“The Government remains determined to implement the difficult policies required for Greece to exit the crisis.”
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