[markbila]

Greece’s credit ratings were cut to “C” by Moody’s Investors Service after it negotiated the biggest sovereign debt restructuring ever.

Moody’s dropped Greece’s rating to the lowest level from Ca, saying in a statement today that investors who participate in the nation’s debt exchange will get about 70 percent less than the face value of their holdings. The deal constitutes “a distressed exchange, and hence a default,” the New York-based rating company said.

The downgrade follows S&P’s decision on Feb. 27 to lower Greece to “selective default” after the announcement of the plan for investors to trade their bonds for new securities. The swap will reduce Greece’s 200 billion euros ($264 billion) of privately held debt by about half if all investors participate.

Greece negotiated the restructuring as it seeks to reduce national debt to 120 percent of gross domestic product by 2020, from 160 percent last year, and to meet the terms of a 130 billion euro international bailout.

The country faces a high risk of default even if the plan is successful, Moody’s said. It will be unlikely to be able to sell bonds to private investors once its bailout package runs out, according to the rating company.