Standard & Poor's downgraded Greece's debt deeper into junk status on Tuesday, saying that a bailout scheme agreed by euro zone leaders last week increased the likelihood of debt restructuring.

The firm cut Greece's rating by two notches to BB-, lower than its rating of BB for Turkey and Egypt, and warned it could downgrade the debt-choked country by another one or two notches in case of budget slippages.

We believe ... it (the European Stability Mechanism) undermines Greece's plans to resume commercial borrowing by mid-2013, when the current EU/IMF program of official financial support terminates, and increases the likelihood of debt restructuring, S&P said.

The first euro zone country to ask for a bailout, Greece is rated junk by all three major rating agencies. It has suffered series of downgrades since it revealed a huge budget deficit in 2009, triggering a debt a crisis that shook the euro zone.

Earlier this month, Moody's cut Greece's rating to B1, one notch below S&P's new rating. Fitch rates Greece BB+, two notches higher than S&P.

The firm said there were growing risks to Greece's budgetary position, with revenues underperforming and prospects of better tax collection remaining uncertain. It said more measures were needed to meet 2011 deficit targets.

We believe that additional measures to meet the targets could create further political and social pressures which, in turn, could undermine the government's resolve to fully comply with the European Union/International Monetary Fund program, S&P said in the statement.

Greek Prime Minister George Papandreou said the downgrade did not reflect Greece's efforts and that Athens aimed to return to bond markets as soon as possible.

(Reporting by Ingrid Melander; Editing by Ruth Pitchford)

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