Completing the review it commenced on May 10, Moody's said on Thursday that "Greek municipalities, including the city of Athens, are unlikely to have enough financial flexibility to enable their credit quality to be stronger than that of the sovereign itself".

"The strong operational and financial linkages between the city and the sovereign imply significant limitations for the city's administration to act independently from the sovereign and outside of the scope of broader government reforms," Moody's said, adding that "these linkages are illustrated in the recent deterioration in the city's financial performance, which has mirrored the overall deterioration of the sovereign's fiscal position," according to Moody's.

It added that "pre-closing figures for 2010 reveal Athens' difficulty in adjusting expenditure levels to match lower revenue, resulting in a widening cash financing deficit", and noted that, "as the capital city of Greece, Athens plays a key role as the financial, economic and political hub of the country", accounting for almost 50% of national GDP and a total population of 745,000.