Fitch rating agency has expectedly downgraded Greece's long-term ratings to its lowest rating above a default, the first of a serious of cuts the country can expect after the bond exchange plan to ease its massive debt.

Fitch lowered Greece's credit grade by two levels to C from CCC, saying a default is "highly likely in the near term."

The news comes a day after Greece secured a second package of bailout loans from the so-called Troika – the IMF, European Commission and ECB – worth EUR 130 B.

The deal is not enough to save Greece from a default though, Fitch said Wednesday:

"The proposal to reduce Greece's public debt burden via a debt exchange with private creditors will, if completed, constitute a rating default, and result in the country's IDR being lowered to 'Restricted Default' ('RD') upon completion. The ratings of GGBs affected by the exchange, including those not tendered but restructured under CACs, which are expected to be imposed retrospectively on bonds issued under Greek law, will also be lowered to 'D' ('default') at this time."

Fitch says the exchange, if completed, would constitute a "distressed debt exchange".

Under the deal announced on Tuesday, banks and other investors in Greek government debt agreed to exchange their debt for new bonds that are worth much less and pay a modest rate of interest.

Including the reduced interest rate, the losses to the banking industry are more than 70%.

"We're treating Greece as a unique experience in a euro- zone context," said Fitch's Rawkins.

"We can highlight differences with other countries including that the programs are working in Ireland and Portugal and in Greece they weren't. Current account imbalances are coming down in Ireland and Portugal and in Greece they aren't."

The country's debt was forecast to balloon to almost double the size of its shrinking economy this year without the write- off, the European Commission said in November.

All three big ratings agencies -- Fitch, Moody's and Standard & Poor's -- downgraded Greece in July when an initial debt swap plan was unveiled and have warned that losses for private creditors would trigger a temporary default.

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