LONDON (AP) ― Greece’s credit grade will remain low, probably still in “junk” status, even after its debt load is cut as part of a European plan to fight the financial crisis, Fitch ratings agency said Friday.

The EU plan asks Greece’s private creditors to take losses of 50 percent on their holdings of the country’s bonds. Along with new loans and other measures, that is meant to bring Greece’s debt down to 120 percent of economic output by 2020.

Fitch welcomed the broad outline of the plan, but said it would likely still leave the country’s rating in the “B” category, only a few notches up from its current CCC grade. Most B ratings are in so-called “junk” status, meaning non-investment grade.

“Greece would still have a large amount of debt outstanding, its growth prospects are weak and its willingness to implement structural reforms may dissipate,” the agency said in a report.

Private creditors accepting the EU plan would swap their bonds with new ones of half their value. Fitch noted that the amount of debt Greece would be able to cut depends on the creditors’ participation rate and further details on the deal that have yet to be ironed out.

Fitch said the deal would constitute a default for the country, as widely expected. All major ratings agencies had already said so this summer, when a similar deal had been proposed. They call it a selective default to differentiate it from a messier form of default in which losses are forced on the private creditors.

EU leaders made the current deal a voluntary one for the private creditors because forcing losses on them could have triggered huge insurance payments on the bonds. Such payments are what helped plunge the global economy into recession after U.S. investment bank Lehman Brothers collapsed in 2008.

The agency expects Greece’s debt to peak at 142 percent of economic output in 2013 before easing again.

Fitch said the broader EU deal to fight the debt crisis ― which also included a plan to increase the capital buffers of the continent’s big banks and measures to boost the firepower of the bailout fund ― were a step toward stabilizing the eurozone.

It warned, however, that a real improvement in the currency bloc’s prospects and its sovereign credit ratings will depend on an economic recovery and lowering debt. Most analysts expect economic growth to remain weak in coming months.