The Greek government's efforts to pull its economy out of crisis have been dealt a massive blow as its debt rating has been slashed.
The country is now only two notches away from Standard & Poor's (S&P) benchmark default rating after its credit rating was cut to CCC, the lowest in the world.
Greek sovereign debt is now rated below Ecuador, Jamaica, Pakistan and Grenada.
The company said it believes there is a higher likelihood that Greece will see one or more defaults over the next 12 months.
Speaking on Jeff Randall Live, Roger Bootle, managing director of Capital Economics said it had been just a matter of time before such an announcement would be made.
"Well, surprise, surprise. It's really academic isn't it? The Greek government's been bust for ages, I think. This is a game, essentially."
"It's not good news. We were hoping we would get some voluntary rollovers. In other words, the investors in Greece were actually going to say 'well, we'll continue to invest when that debt comes up for reinvestment', but that's going to become increasingly difficult when you have a downgrade of this magnitude."
In response to S&P's move, Greece said the decision is based on rumours of a default and does not take into account current talks for a second bailout by the European Union (EU) and the International Monetary Fund (IMF (Berlin: MXG1.BE - news) ).
Athens also said the government is continuing with efforts to bring its debt under control.
The cut comes just days after the Greek government unveiled a new 28bn euro (£24.6bn) austerity plan.
It is seen as essential in securing the fifth instalment of a 110bn euro (£96.8bn) bailout package agreed on in May 2010 with the EU and the IMF.
The previous day more than 20,000 Greeks protested against austerity measures in Athens and workers at state-owned utility PPC announced strikes to oppose the privatisation the company.
In the 19th straight day of demonstrations against cutbacks, protesters gathered in front of parliament shouting "Thieves! Thieves! Thieves!".
Talks between the EU, eurozone countries and the IMF over a second bailout for Greece, expected to total as much as 120bn euros (£105.5bn), appear to be deadlocked as Germany insists on the involvement of private investors.