Standard & Poor’s upgrades Greece six notches

Standard & Poor’s has raised Greece’s credit rating six notches to an 18-month high due to “the strong determination” of the eurozone to help the struggling member state.

S&P lifted Greece from “selective default” to B- and placed the outlook on “stable” after the European authorities released a €34.3bn (£28bn) tranche of bail-out funds and Athens completed a debt buyback. Although the rating has not been as strong since June 2011, Greece is still sub-investment grade – or “junk”.

“The upgrade reflects our view of the strong determination of eurozone member states to preserve Greek membership,” S&P said. It added that the stable outlook “ balanced our view of the government’s commitment to a fiscal and structural adjustment against the economic and political challenges of doing so”.

Greece recently struck a deal with its eurozone partners to reduce its debts to 124pc of GDP in 2020 and “substantially lower” than 110pc in 2022. Eurozone members have agreed to cut the interest rate charged on their rescue loans, a 10-year deferral on some interest payments, and maturity extensions on much of the debt.

“We view the eurozone member states’ decision to provide material cash flow relief to Greece as indicative of their determination to restore stability to Greek finances, and to preserve Greece’s eurozone membership,” S&P said.

Greece was downgraded to “junk”, or BB+, in April 2010 and has been rated CC or worse since July 2011, first slipping into “selective default” in February after private sector creditors were made to take losses on their debts. The rating was raised to CCC in May before being cut again to “selective default” 13 days ago. The latest rebound is far better than expected.

By Philip Aldrick

available at http://www.telegraph.co.uk/finance/economics/9754225/SandP-upgrades-Greece-six-notches.html