Moody's downgrades Athens

Moody's Investors Service said it downgraded the City of Athens' issuer rating to Caa1 from B1 and changed the outlook to negative.

The downgrade concludes a review for downgrade that began May 10, Moody's said.

The action follows a decision to downgrade the sovereign rating of Greece to Caa1 with a negative outlook, the agency said.

The sovereign action reflects the increased risk that Greece will fail to stabilize its debt position as well as the increased likelihood that Greece's supporters will require the participation of private creditors in a debt restructuring as a precondition for funding support, Moody's said.

Taken together, these risks imply at least an even chance of default over the horizon, the agency said.

Greek municipalities, including the city of Athens, are unlikely to have enough financial flexibility to enable their credit quality to be stronger than that of the sovereign itself, Moody's added.

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