Moody's cut Greece's debt to A2 from A1 on Tuesday over soaring deficits, becoming the third major rating agency to downgrade the highly-indebted country's rating this month.
Greece has been in turmoil since then Prime Minister Costas Karamanlis called early elections in September, 2009 seeking a new mandate to deal with Greece's economic slowdown. He lost to his socialist opponents.
Following is a timeline of events since then.
Oct. 2009 – The snap election on Oct. 4 returns George Papandreou's socialist PASOK party to power with a comfortable majority. It will hold 160 seats in the 300-seat parliament. The new government discloses the 2009 budget deficit will be 12.7 percent, more than double the previously announced figure.
Nov. 2009 – The new government pledges in its 2010 draft budget to save Greece from bankruptcy by cutting the deficit while keeping electoral promises to help the poor amid the economic crisis. The final budget draft is submitted on Nov. 20 and is due for adoption on Dec 23.
— Greece aims to cut its budget deficit to 9.1 percent of GDP in 2010 to assure EU partners and markets it is serious about restoring fiscal health, its final budget draft shows.
— It also sees public debt rising to 121 percent of GDP in 2010 from 113.4 percent in 2009. EU forecasts on Greece for 2010 are worse, with the deficit seen at 12.2 percent of GDP and national debt rising to 124.9 percent of GDP, the EU's worst.
Dec. 2009 — S&P on Dec. 7 puts the country's A- sovereign rating on negative watch. By 1215 GMT the next day, Greek bank stocks <.FTATBNK> shed almost 6 pct, extending the previous day's losses, as the S&P report said Greek lenders faced the highest risk in Western Europe. The broader Greek market <.ATG> falls 3.6 percent.
— The same day, Dec 8, Fitch Ratings, which had cut Greece to A- when the government revealed the higher deficit, cuts Greek debt to BBB+ with a negative outlook, the first time in 10 years a ratings agency puts Greece below the A investment grade.
— Shares in Greek banks deepen losses to fall almost 8 percent while the euro hit a day low after the downgrade. On Dec. 9, Papandreou says he is determined to win back the country's lost credibility.
— On Dec. 14, Papandreou outlines policies to cut the country's ballooning budget deficit and try to regain the trust of investors and EU partners. Papandreou announces a 10 percent cut in social security spending in 2010. Says he will abolish bonuses at state banks and slap a 90 percent tax on private bankers' bonuses. Vows a serious fight against corruption and tax evasion, calling them the country's biggest problems.
— He announces a drastic overhaul of the pension system in six months and a new tax system that will make the wealthier carry more of the burden.
— On Dec. 15, markets fall in reaction to Papandreou announcements and workers immediately protest the cuts in social security.
— The next day Standard & Poor's cut Greece's rating by one notch, to BBB-plus from A-minus, saying austerity steps announced by Prime Minister Papandreou were unlikely to produce a "sustainable" reduction in the public debt burden.
— On Dec. 19 with measures still failing to convince markets, they continue to sell Greek government bonds and stocks. Yield spreads between Greek and benchmark German 10-year bunds widened to an average 272 basis points on that day, the widest in more than 8 months. — Moody's cuts Greece's debt to A2 from A1 on Dec. 22 over soaring deficits, the third rating agency to downgrade Greece, but still two notches above that of Fitch and S&P. The spread between 10-year Greek and German benchmark Bunds tighten after the downgrade.
