S&P says weighing possible downgrade of Greece

NEW YORK: Rating agency Standard & Poor's says it may downgrade Greece's long-term debt if new European bailout rules prove onerous to private holders of the country's bonds.

S&P said Thursday it will decide whether to downgrade Greece within three months, by which time the new debt-crisis rules will be clear. S&P issued a similar warning about Portugal this week.

European finance ministers agreed Sunday to create a permanent mechanism to solve future debt crises in the 16 countries that use the euro. The mechanism, which will be launched in mid-2013, could force investors such as banks or hedge funds to take losses if a country runs out of money.

S&P says the rules may make it likely that government lenders would be repaid to the detriment of the private-sector debt holders.