Moody’s lowers Greece's credit rating

After several weeks of quiet trading, the eurozone credit default swap (CDS) market was pushed back into the spotlight today, as Greece's sovereign credit rating was downgraded by Moody's from B1 to Ba1. Moody's cited a number of reasons for the downgrade, including the Greek government's continued difficulty in securing revenue streams and doubt over the feasibility of its highly ambitious debt-consolidation plan. Greek CDS spreads have experienced some erratic interday trading moves in recent months, but have recorded a steady rise from 854 basis points on February 1 to a seven-week high of 1,058bp on March 4, according to data from financial information provider Markit. By 1.00pm UK time today, Greek spreads had dropped to 1,005bp.

Although the rest of the eurozone was spared such dramatic movement, risk perceptions increased in many places. Portuguese spreads led the way, moving from 481bp to 490bp, their highest point since January 13. In Italy, spreads widened by 3bp to 175bp, while in Spain they moved up 2bp to 239bp. Spreads in Ireland stayed flat at 580bp. The trend continued in the eurozone's core countries – Belgian spreads increased from 161bp to 163bp, and German spreads widened by 1bp to 48bp.

In the Middle East and north Africa, signs of stability began to creep in after the turmoil of January and February. Tunisian spreads declined from 196bp to 193bp, and spreads in Saudi Arabia dropped by 1bp to 131bp. Egyptian spreads recorded the biggest move, jumping up 11bp to 374bp.

This article first appeared on Risk.net