Moody's further cut Greece's credit rating Friday citing the losses private investors will incur after a recent deal to write off 107 billion euros ($141.3 billion) of Greek sovereign debt.
Moody's lowered the country's rating to "C" from "Ca", both in the junk-level range, but did not assign an outlook -- which might have indicated whether the agency sees improvement or not ahead in the coming months.
"Today's rating decision was prompted by the recently announced debt exchange proposals for Greece, which imply expected losses to investors in excess of 70 percent," Moody's said.
Moody's said the planned debt exchange -- which entails private holders of Greek debt writing off much of the 206 billion euros in Greek bonds they hold -- "would constitute a distressed exchange, and hence a default."
But it said that since the deal is a necessary part of the much larger second Greek bailout plan agreed last month, the country avoided an outright default.
Nevertheless, Moody's said, "the risk of a default even after the debt exchange has been completed remains high. Moody's believes that Greece will still face medium-term solvency challenges."
"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.
"Moody's will consider these issues in the post-exchange re-assessment of Greece's credit risk profile."