China rating agency downgrades Greek debt

(BEIJING) - Chinese rating agency Dagong said Tuesday it had cut its sovereign rating for Greece to the second-lowest level because the indebted nation was no longer solvent and needed massive restructuring.

The agency cut Greek debt from triple-C to C and warned it may downgrade it again to the lowest "default" level, if the government went ahead with the current restructuring plan.

"As Greece has completely lost its solvency it has to prepare for a massive debt restructuring," the agency said, adding that the restructuring plan in the latest rescue programme was "likely to generate a default".

"The new rescue programme offered by the EU cannot drag the Greek government debt back to a sustainable track. The huge debt stock brings heavy interest payment for Greece."

Dagong has little sway outside of China, but has made headlines by accusing mainstream agencies Moody's, Fitch and Standard & Poor's of causing the financial crisis by not properly disclosing risk.

Chairman Guan Jianzhong, a paid adviser to China's government, insists his agency is fully independent -- and stands by his tough talk about his rivals, whose ratings affect interest rates at which states and companies can borrow.

Beijing has expressed support for a rescue plan for Greece and the wider eurozone, but has not committed to making any contribution to a bail-out fund, despite pressure from European leaders.