S&P downgrades Greece to B-

Standard & Poor's said it lowered its long-term sovereign credit rating on the Hellenic Republic (Greece) to B- from B.

The long- and short-term ratings on Greece remain on CreditWatch with negative implications.

S&P said the downgrade reflects its view that the liquidity constraints weighing on Greece's banks and its economy have narrowed the timeframe during which the new government can reach an agreement on a financing program with its official creditors: European Union member states, the EFSF, the ECB and the IMF.

Although the newly elected Greek government has been in power for less than two weeks, the agency believes its limited cash buffers and approaching debt redemptions to official preferred creditors constrain its negotiating flexibility.

In S&P’s view, a prolongation of talks with official creditors could also lead to further pressure on financial stability in the form of deposit withdrawals and, in a worst-case scenario, the imposition of capital controls and a loss of access to lender-of-last-resort financing, potentially resulting in Greece's exclusion from the Economic and Monetary Union.

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