(Bloomberg News) Some countries in the euro region may have their credit ratings cut further while a Greece debt default is a "possibility," said Moritz Kraemer, managing director of European sovereign ratings at Standard & Poor's.

Asked if the worst was over for the region's sovereign credit-rating outlook, Kraemer said: "I wish I could say yes, but the answer is no."

The debt ratings of Portugal and Greece remain at risk of being cut due to concern about how a European Union rescue fund may affect holders of the two nations' sovereign bonds, S&P said March 1. Ireland retained a negative outlook after S&P cuts its ratings on Feb. 2. Moody's Investors Service downgraded Greece's government bond ratings yesterday to B1 from Ba1, and assigned a negative outlook to the rating.

"We still have a number of countries with a negative outlook or CreditWatch negative, indicating their credit ratings may be going down further," Kraemer said in an interview at a EuroMoney conference in London. "Trigger points for that could be slippage in fiscal consolidation and structural reforms, but also decisions that will be taken at the European level later this month."

Greek 10-year bond yields and credit-default swaps surged to a record as borrowing costs increased at a debt sale and before European leaders begin meetings aimed at containing the sovereign debt crisis.

Recovery Levels

Spanish bonds also slid as the government sold debt through banks. Greek bond losses extended declines to a ninth day after the nation's credit rating was cut by Moody's. Portuguese 10- year bonds fell for a second day before a notes auction tomorrow. German 10-year bonds dropped amid speculation the nation's economic growth will add to pressure on central bankers to increase interest rates.

A debt default by the Greece's government is "a possibility" and that investors may recover between 30% and 50% of the total value if that happens, Kraemer said. Greece is rated BB+ by S&P, or one level below investment grade.

"We do rate Greece as a non-investment grade for about a year now, so clearly a default is a possibility," said Kraemer. "Defaults out of investment grade are extraordinarily unlikely and we don't think there will be any."

Further Downgrades

The Greek Finance Ministry said yesterday that Moody's decision was "incomprehensible." Moody's didn't heed the progress Greece made in cutting the deficit by 6percentage points of gross domestic product last year, according to a ministry statement.