Standard & Poor's has lowered Greece's credit rating to "selective default" in light of its offer to buy back bonds at well below their face value.
Greece has announced plans to spend up to $13 billion on the buyback in a bid to bring its staggering debt load under control.
S&P says it sees the buyback as essentially a distressed debt restructuring tantamount to a default. The rating agency says it may raise its long-term credit rating on Greece back to junk-grade "CCC" once the buyback is complete.
Greece has fallen under S&P's default rating before. It returned to junk status this spring after it completed a major debt writedown with private creditors.