Moody's cuts Greece deeper into junk territory, says 'Grexit' should not be underestimated

The impact on the euro zone if Greece leaves it “should not be underestimated,” Moody’s said Thursday, a day after the agency cut Greece’s credit rating deeper into junk territory. 

The lack of progress “means the probability of a default, and of exit, is rising,” though the country and its creditors are likely to reach a deal on the debt, said Moody’s.

The direct economic and financial influence of a Greek departure from the euro area would be small, but an “exit could nevertheless cause a confidence shock and disrupt government debt markets,” said Alastair Wilson, managing director of global sovereign risk at Moody’s, in a report.

Late Wednesday the ratings agency Moody’s cut its rating on Greece’s debt to ‘Caa2′.