So it is no surprise that the cost of insuring Greek debt has hit another new high, rising 131 basis points to 2,025, meaning it costs €2.025m to insure €10m worth of exposure to Greek bonds.

The auction comes ahead of a eurozone finance ministers' meeting in Brussels later today to debate using the EU bailout fund, the European Financial Stability Facility, to insure sovereign debt with guarantees.

It insures long-term debt and equity investments as well as other assets and contracts with long-term periods.

Friday's downgrade also saw the cost of insuring Portuguese debt against default rise sharply amid a day of fairly muted trading in the credit default swap (CDS) market.

The cost of insuring Portuguese debt against default rose by 15 basis points to 700 basis points.

The effect of the announcement was wide spread fear in the global financial markets with a negative impact of equities markets around the world and a significant increase in the cost of insuring debt issued by Dubai related entities.

As the cost of insuring Italian debt against default remained at record highs of 6.1pc, Giorgio Napolitano, the Italian president, appeared to threatened to bring down the government if the reforms were not agreed.

Moreover, it has begun to insure unsecured corporate debt, a move out of its traditional business that has caused some uneasiness on Wall Street.

The rating change does not include insured or refunded debt.

Bond markets continued to signal that it expects a restructuring will happen, with the cost of insuring Greek, Irish and Portuguese debt against default rising further on Monday.