Moody's cut its rating on Greece to 'Caa3' from 'Caa2' as the country became the first developed economy to default on a loan with the International Monetary Fund.

Moody's said the likelihood of Greece obtaining support from its creditors had fallen since the ratings agency's prior review of the country in April.

"Without support from official creditors, and the economic and fiscal reforms needed to retain that support and to place its own finances on a more sustainable footing, Greece will default on its privately held obligations at some point, the ratings agency said in a statement. 

Concerns around a Greek exit from the euro common currency have led to an uneasiness in the financial markets, as the country's membership in the 19-nation currency bloc remains uncertain.

Greece, which defaulted on a 1.6 billion euro IMF loan, is on course for a referendum at the weekend at which its citizens will vote on whether to accept the austerity terms of continued international aid.

The downgrade follows similar ratings actions at Fitch and Standard & Poor's.

Moody's also placed the country's rating on review for a further downgrade, which would most likely take place in the event of a negative outcome in the referendum.  (Reuters)

Source: www.businessworld.ie