|Earlier in the week, Standards & Poor cut Greece's long-term rating to 'selective default' [EPA]
Ratings agency Moody's has downgraded Greece to the lowest rating on its bond scale, saying that risk of default remains high even if a bond-swap deal with banks and other private investors, due to be completed this month, is successful.
Friday's downgrade follows a deal with private investors that would see them lose an estimated 70 per cent of their holdings in Greek debt.
Moody's lowered Greece's local and foreign-currency bond ratings to C from Ca. It said it would "re-assess the credit risk profile" after Greece issues the new bonds.
The moody's downgrade, following similar action by Standard & Poor's earlier this week, brings the number of credit agencies lowering the nation's rating to three.
The S&P on Monday cut Greece's long-term ratings to 'selective default'.
The swap deal aims to cut $144b from the country's debt, and would see private investors lose more than half the face value of their Greek bonds in exchange for new ones issued with more favourable repayment terms for the crisis-hit nation.
Risks remain high
The exchange is an integral part of a second bailout package for Greece by other eurozone countries and the International Monetary Fund. Greece formally launched the bond swap on Friday.
Under the deal, bondholders will take losses of 53.5 per cent on the nominal value of their Greek holdings, with actual losses put at around 74 per cent.
"Looking ahead, the EU programme and proposed debt exchanges will reduce Greece's debt burden, but the risk of a default even after the debt exchange has been completed remains high," Moody's said.
"Moody's believes that Greece will still face medium-term solvency challenges: its stock of debt will still be well in excess of 100 percent of gross domestic product for many years, the country is unlikely to be able to access the private market once the second assistance package runs out, and its planned fiscal and economic reforms will still face very significant implementation risks."
Greece has been relying since May 2010 on rescue loans from eurozone partners and the IMF.
Earlier Friday, provisional figures from the finance ministry figures showed Greece posting a deficit in January of $652 million in contrast to last year's equivalent surplus of 154 million euros.