S&P To Greece: We're Watching You
Ratings agency S&P just put Greece's debt ratings on "CreditWatch with negative implications."
In a release, S&P said, "The CreditWatch placement reflects our view that some of the economic and budgetary policies advocated by the newly elected Greek government, led by the left-wing Syriza party, are incompatible with the policy framework agreed between the previous government and official creditors.
S&P added that, "In our opinion, if the new Greek government fails to agree with official creditors on further financial support, this would further weaken Greece's creditworthiness."
This announcement from S&P follows what has been a terrible week for Greek stocks, and more specifically Greek bank stocks.
On Wednesday, each of Greece's four largest banks dropped by at least 20%.
The main problem here is that Greece's banks have largely been funded by a lifeline from the ECB, though this comes with some conditions that the newly elected Syriza government isn't keen to stick to.
And more broadly, Syriza's reform promises made during the campaign have S&P concerned.
"In its pre-election program," S&P writes, "Syriza also envisaged, among others, an increase in the minimum wage, the elimination of the property tax, and the easing of the budget primary surplus target. In our opinion, these policy proposals are not in line with the current Memorandum of Understanding agreed between the previous Greek government and official creditors."
Read S&P's full comment here »