Moody’s has downgraded Greece’s debt rating even further below junk status amid fears the country will end up having to restructure its massive debts.

The agency said today that it is lowering its rating by three notches to B1 from Ba1, citing three main reasons for the downgrade.

As well as warning of major implementation risks associated with the government’s economic programme, Moody’s noted the considerable difficulties Greece has in raising revenues and highlighted the risk of more onerous conditions when the current bail-out package ends in 2013.

The Greek finance ministry said Moody's downgrade of the country's credit rating was completely unjustified and showed that rating agencies must be regulated more tightly.

"The rating downgrade announced by Moody's today is completely unjustified as it does not reflect an objective and balanced assessment of the conditions Greece is presently facing," the ministry said in a statement.

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

Agencies