Moody's slashed Greece's credit rating on Monday on fears the country's efforts to cut its debt will not be enough, heaping further pressure on EU leaders to ease repayment terms on its bailout loans or risk a default.

Moody's cut the country's rating by three notches to B1 from Ba1 with a negative outlook, citing significant risks to the country's fiscal consolidation plan and risks of a debt restructuring.

Moody's now has the lowest rating for Greece of all the major credit agencies and is the first to classify Greek government debt as 'highly speculative'.

The Greek finance ministry said the cut was completely unjustified.

Greece signed in May a 110 billion euro ($153.9 billion) rescue package with the EU and IMF to avoid default, but many see the repayment terms as too onerous.

European Monetary Affairs Commissioner Olli Rehn told a German newspaper on Saturday that countries that share the euro currency must grant Greece and fellow debt-strapped nation Ireland easier terms on loans they have provided.

Moody's said on Monday that Greece continues to face difficulties with revenue collection and there was a risk that the country did not satisfy solvency criteria attached to EU/IMF support after 2013 which could lead to a debt restructuring.

The fiscal consolidation measures and structural reforms that are needed to stabilize the country's debt metrics remain very ambitious and are subject to significant implementation risks, the agency said in a statement.

Moody's said it was also concerned by the lack of certainty surrounding the nature of financial support that will be available to Greece after 2013, and its implications for bondholders.

The likelihood of a default or distressed exchange has risen since its last downgrade of the Greek government debt rating in June 2010, the agency said.

The spread on 10-year Greek debt against benchmark Bunds widened by 8 basis points to 9.13 percent following the Moody's downgrade, while the euro fell about 30 pips against the dollar.

Earlier this month, Standard & Poor's said it may cut the sovereign rating of Greece, depending on the details of Europe's crisis fund that euro zone policy makers are discussing.

In January, Fitch became the third rating agency to cut Greek debt to junk, highlighting persisting doubts over the country's ability to pull itself out of a severe debt crisis that has shaken the euro zone.

(Reporting by Angeliki Koutantou; Writing by Toby Chopra, editing by John Stonestreet)