Euro drops as Greece rating downgraded to junk

Asian stocks plunged Wednesday and the euro neared a one-year low against the dollar after the Greek debt rating was downgraded. The European Union continues to negotiate a massive bailout.

Reuters

Asian markets followed Europe and Wall Street, which dropped Tuesday after the ratings agency Standard & Poor gave Greece a “junk” rating. The agency also lowered Portugal’s rating, though it remained at investment grade.

The rating downgrade means investors, such as pension funds, will no longer be allowed to buy Greece’s bonds, bringing closer the possibility of default.

Greece faces a 19 May deadline to pay back off some 9 billion euros of debt.

EU President Herman Van Rompuy said in Tokyo Wednesday that the 15 eurozone leaders will hold a summit around 10 May to agree on a 30 billion euro rescue package.

"Heads of state and governments will decide to activate the financing of the joint program under negotiations now between the European commission, the ECB [European Central Bank] and the IMF [International Monetary Fund] and the Greek government,” he said, adding that there will be no restructuring of the country’s debt.

The Greek Finance Minister George Papaconstantinou criticised Europe for taking too long to decide on the aid package after it formally asked for 45 billion euros in loans last week.