Moody's Investors Service said on Monday it had downgraded Greece's sovereign debt rating by three notches, leaving it one away from default, and warned creditors would lose out from the latest bailout deal.
The ratings agency said in a statement that it has "downgraded Greece's local- and foreign-currency bond ratings to Ca from Caa1 and has assigned a developing outlook to the ratings".
"The combination of the announced EU support programme and debt exchange proposals by major financial institutions implies that private creditors will incur substantial economic losses on their holdings of government debt," Moody's said.
"The rating's developing outlook reflects the current uncertainty about the exact market value of the securities creditors will receive in the exchange."
After the debt exchanges have been completed, Moody's will re-assess the credit risk profile of any outstanding or new securities issued by the Greek government, the statement added.
"The announced EU programme along with the Institute of International Finance's (IIF's) statement (representing major financial institutions) implies that the probability of a distressed exchange, and hence a default, on Greek government bonds is virtually 100%," it said.
"The support package for Greece also benefits all euro area sovereigns by containing the severe near-term contagion risk that would likely have followed a disorderly payment default or large haircut on existing Greek debt."