LONDON (AP) — Greece's credit grade will remain low, probably still in "junk" status, even after its debt load is cut as part of a European plan to fight the financial crisis, Fitch ratings agency said Friday.
The EU plan asks Greece's private creditors to take losses of 50 percent on their holdings of the country's bonds. Along with new loans and other measures, that is meant to bring Greece's debt down to 120 percent of economic output by 2020.
Fitch welcomed the broad outline of the plan, but said it would likely still leave the country's rating in the 'B' category, only a few notches up from its current CCC grade. Most B ratings are in so-called "junk" status, meaning non-investment grade.
"Greece would still have a large amount of debt outstanding, its growth prospects are weak and its willingness to implement structural reforms may dissipate," the agency said in a report.
Private creditors accepting the EU plan would swap their bonds with new ones of half their value. Fitch noted that the amount of debt Greece would be able to cut depends on the creditors' participation rate and further details on the deal that have yet to be ironed out.
