S&P not sees sovereign credit risk as global threat

08:39, May 11, 2010      

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Standard and Poor's (S&P) said it does not see sovereign credit risk as a global threat, although the problem has been particularly acute for Greece even with the huge rescue deal backed by the European Union and the International Monetary Fund.

In a recent exclusive interview with Xinhua, director of S&P's sovereign credit rating Kim Eng Tan and his analyst’s team noted that the rating agency downgraded the credit ratings of Greece because they were looking beyond the immediate bailout at the long-term challenges that the country faces.

"We thought the bailout would happen and that it would buy Greece some breathing space in the short term, but that it would not solve Greece's longer term problems. We believe the outlook for Greece's economy over the next few years is worsening and this will make its task of restoring fiscal stability much harder," S&P analysts said.

Recently, the agency has also downgraded the ratings for Portugal and Spain. But analysts meanwhile said that its ratings of the two and other euro zone countries remained in the category of investment grade, as they were significantly more creditworthy than Greece.

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