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S&P says Grexit now more likely than not, but contagion risks low
July 6, 2015 / 11:45 AM / 2 years ago

S&P says Grexit now more likely than not, but contagion risks low

LONDON (Reuters) - The top European sovereign analyst at rating agency Standard & Poor’s said it was now more likely than not that Greece would leave the euro following the country’s overwhelming vote against EU-prescribed austerity measures.

In an interview with Reuters, S&P’s Moritz Kraemer said the result of the vote limited both Greece’s and the euro zone’s room for maneuver in what are already difficult debt negotiations.

“We think it’s more likely than not now that ‘Grexit’ would happen because its just so difficult for (Greek prime minister)Tsipras to row back after such a victory to what was on the table before,” Kraemer said.

However, he did not expect any rating impact for other high-debt euro zone countries. On average the losses from Greece for each of the 18 other members could add up to 3-4 percent of GDP, but that could be spread over decades.

The same in terms of rating impact was also true for other non-euro zone countries neighboring Greece like Bulgaria, Albania or Macedonia, where Greek banks own many of their lenders.

“Our signaling so far is that we don’t think there will be a direct-linked rating action in south-eastern Europe,” he added.

Reporting by Marc Jones

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