S&P Cuts Ratings on Greece Again

        Standard & Poor's Ratings Services downgraded Greece's credit ratings deeper into junk territory, while speculating that the probability the country will exit the eurozone is roughly 50%.
        The one-notch downgrade to triple-C-minus comes with a negative outlook, and the credit ratings company said it is likely Greece will default on its commercial debt within the next six months, unless circumstances change.
        The comments sent U.S. stocks to session lows, with the Dow Jones Industrial Average recently off 301 points, or 1.7%.
        S&P said it views the Greek government's decision to hold a referendum next Sunday on whether to accept austerity measures demanded by its creditors as a sign Greece Prime Minister Alexis Tsipras will prioritize the nation's domestic politics over financial and economic stability, debt repayments and membership in the eurozone.
        S&P estimated the eurosystem's support to Greek banks—directly through the ECB's main refinancing operations and indirectly via the Bank of Greece's Emergency Liquidity Assistance—exceeds 70% of the country's gross domestic product. Without it, Greece's payment system would shut down and its banks wouldn't be able to operate, according to S&P.
        Also on Monday, Athens confirmed it wouldn't be able to make a loan repayment to the International Monetary Fund due Tuesday. S&P said though failure to make Tuesday's IMF payment wouldn't constitute a commercial default under its criteria, it is a legal event of default under a December 2012 agreement between Greece and the European Financial Stability Facility.
        Over the weekend, Greece decided to shut down its banking system for six days as the nation's central bank moved to impose controls to prevent money from leaving the country. The eurozone, also over the weekend, rejected a Greek request for a one-month extension to its bailout.
        Monday's downgrade marks S&P's fourth cut to Greece's credit ratings this year. Fitch Ratings and Moody's Investors Service also have Greece's ratings in highly speculative territory.
        Write to Tess Stynes at tess.stynes@wsj.com
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        (END) Dow Jones Newswires

        June 30, 2015 01:40 ET (05:40 GMT)

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