Greece default would hurt other countries, says Moody's

Greece is seeking political consensus over its latest austerity programme

Any Greek debt default would likely hurt the credit rating of other peripheral eurozone countries, the ratings agency Moody's has warned.

In a statement on the impact of a potential default, Moody's said such a default would also hurt Greek banks.
Moody's also became the latest agency to say any kind of restructuring of Greek debt would constitute a default.
And Prime Minister George Papandreou is meeting opposition leaders to discuss Greece's latest austerity plan.
Mr Papandreou met Conservative party leader Antonis Samaras in the morning, and is to meet another four party leaders later in the day.
However, the head of the Communist party, which is influential with trade unions, has refused to meet.
Greece received a 110bn euro (£96bn; $155bn) bail-out from the European Union and International Monetary Fund last year.
As it attempts to reduce its debts, it has introduced various austerity measures.
But its efforts have not been helped by political bickering and the European Union has called for cross-party support in Greece for a medium-term austerity programme.
'Adverse implications' There has been increasing speculation that Greece could be allowed to restructure its debt.
On Monday, the Luxembourg Prime Minister and head of the eurogroup, Jean-Claude Juncker, said that a restructuring would involve a delay in repayments and a cut in interest payments, but would only be granted if the Greek government met strict targets.
In its statement, Moody's said: "It is apparent that the longer the current state of uncertainty affecting Greece persists, the greater the temptation on the part of both the Greek and the euro area authorities to try to undertake some form of debt restructuring - in other words, to allow Greece to default.
"Moody's believes that a default is likely to have adverse credit rating implications for Greece, possibly some other stressed European sovereigns, and the Greek banks, regardless of the efforts made to achieve an 'orderly' outcome.
"The full impact on Europe's capital markets would be hard to predict and harder still to control. The fallout would have implications for the creditworthiness (and hence the ratings) of issuers across Europe."
Meanwhile, Greece's cost of borrowing in bond markets has continued to rise steadily, as expectations of an eventual default rise.
The yield on its 10-year bonds rose above 17% on Tuesday, up from 15.3% a week ago.

Posted in: BBC News