Standard and Poor's on Wednesday lowered the credit rating on Greece to 'selective default' (SD) from 'CCC', days after the country announced a debt buyback plan to rid the country of its mounting debt.

S&P said the decision follows the Greek government's invitation to private sector bondholders on December 3 to participate in a series of debt buyback auctions. Under S&P's criteria, this move amounted to a 'selective default.'

The rating agency said it is likely to revisit the 'SD' status once the buyback is completed. "In our opinion, Greece's invitation constitutes the launch of what we consider to be a distressed debt restructuring," S&P said.

The agency argued that the offer implies the investor will receive less value than the promise of the original securities. It also slashed the rating on the affected debt issues to 'D'.

The launch of the buyback plan was part of a series of measures agreed to by euro area finance ministers last week. Earlier, Greece was granted two extra years to correct its excessive budget deficit.

Eurogroup is widely expected to approve the EUR 44 billion worth of loan tranche to Greece at next week's meeting. However, Greece has to successfully complete the debt buyback program before December 13, in order to receive the aid.

RTTNews