ATHENS, Greece - March 7, 2011 - The Greek government has reacted angrily to Moody's decision to cut the country's credit rating below that of Egypt, a move that prompted investors to dump the debt of other struggling European economies.

The country's debt was lowered to B1 from Ba1, as the ratings agency warned that Greece faces a shortfall in tax revenue and huge challenges in reforming state-owned companies and its costly health care system.

"The sheer magnitude of the task is becoming ever more apparent," said Sarah Carlson, an analyst at Moody's.
The Greek Finance Ministry yesterday described Moody's move as "totally unjustfied".

"Having completely missed the build-up of risk that led to the global financial crisis in 2008, the rating agencies are now competing with each other to be the first to identify risks that will lead to the next crisis," it said.

The debate did little to reassure investors, who drove the yield on 10-year Greek bonds to 12.32%, as prices for Irish and Portguese bonds also fell.