–Full Text Of Moody’s Release On Downgrade Follows:
–EMU/IMF Support Package Will Shelter Greece While It Consolidates
–Greece Fiscal Plan Has Potential To Restore Confidence

London, 14 June 2010 — Moody’s Investors Service today
downgraded Greece’s government bond ratings by four notches to Ba1 from
A3.

In a release on the downgrade, Moody’s said today’s action
concluded the review for a possible downgrade:

“Today’s rating action concludes the review for possible downgrade,
which Moody’s initiated on 22 April 2010. Moody’s has also downgraded
Greece’s short-term issuer rating to Not-Prime from Prime-1. Greece’s
country ceilings for bonds and bank deposits are unaffected by the
review and remain at Aaa (in line with the Eurozone’s rating). The
outlook on all ratings is stable.

“The Ba1 rating reflects our analysis of the balance of the
strengths and risks associated with the Eurozone/IMF support package.
The package effectively eliminates any near-term risk of a
liquidity-driven default and encourages the implementation of a
credible, feasible, and incentive-compatible set of structural reforms,
which have a high likelihood of stabilizing debt service requirements at
manageable levels,” says Sarah Carlson, Vice President-Senior Analyst in
Moody’s Sovereign Risk Group and lead analyst for Greece.

“Nevertheless, the macroeconomic and implementation risks
associated with the programme are substantial and more consistent with a
Ba1 rating.”

Moody’s believes that the Eurozone/IMF support package has
sheltered the Greek government from the markets while it enacts the very
ambitious fiscal austerity measures and structural economic reforms
stipulated by the package. These have the potential to restore market
confidence, depending on the effectiveness of the government’s
execution, and place the country on a more stable debt trajectory. The
rating agency’s base-case scenario envisions Greece implementing the
policy changes it needs to stabilise its debt-to-GDP ratio at around
150% by 2013, and reduce its debt burden, defined as the interest
payment/revenues ratio, gradually thereafter (expected at 20% in 2014).
Should the economy respond positively to the competitiveness-enhancing
structural reforms, debt stabilisation could be achieved earlier.

“There is considerable uncertainty surrounding the timing and
impact of these measures on the country’s economic growth, particularly
in a less supportive global economic environment,” says Ms Carlson.
“This uncertainty represents a risk that leads Moody’s to believe that
Greece’s creditworthiness is now consistent with a Ba1 rating, a rating
which incorporates a greater, albeit, low risk of default.”

“Moody’s outlook on Greece’s ratings is stable, reflecting the
substantial probability that the rating will not change over the next 12
to 18 months. The key factors that will influence the rating agency’s
view will be the performance of the Greek economy, especially that of
GDP and tax revenues. Information on these developments will take some
time to accumulate and may prove to be either credit positive or
negative”.

Moody’s previous rating action on Greece was implemented on 22
April 2010, when the rating agency downgraded Greece’s rating to A3 and
placed it under review for further downgrade.

–London Bureau; Tel: +442078627492; email; ukeditorial@marketnews.com

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