Moody's investor service has announced a staggering downgrade of Greece's credit rating amidst continued fears that the fiscally troubled euro zone member might default on its debts.

Moody's said on Monday it reduced Greece's credit rating from Ba1 to B1 because of concerns over the Greek fiscal consolidation plan. The news immediately affected Greek bonds and the euro.

Current predictions say that, even if Greece manages to fulfil its three-year adjustment programme, its debt will stand at 158% of GDP by 2013.

The Greek finance ministry has reacted angrily at the decision, calling the downgrade "completely unjustified", as cited by Sky News.

In a statement, the ministry said the decision did "not reflect an objective and balanced assessment of the conditions Greece is presently facing".

"At a time when the global economy is fragile and market sentiment is sensitive, unbalanced and unjustified rating decisions such as Moody's... can initiate damaging self-fulfilling prophecies and certainly strengthens the arguments for tighter regulation of the rating agencies themselves," it said.

Greece was the first country to take an EUR 110 B bailout from the European Financial Stability Fund (EFSF) in May last year. It has since been followed by Ireland, which had to accept help from the EFSF and the International Monetary Fund (IMF) totalling EUR 85 B in November 2010.

Sky News points out it is widely believed Portugal will be the next euro zone country to dip into the EU bailout fund, as its financial crisis continues. EU leaders will meet at a summit in Brussels later in March.

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