Greece credit rating raised by S&P as growth outlook improves

ATHENS: Greece’s sovereign credit rating was raised one level by S&P Global Ratings, helping the government’s plans to continue a bond-market comeback this year.

The country’s long-term foreign currency debt was upgraded to B with a positive outlook from B-, S&P said in a statement. The new ranking remains five levels below investment grade.

“Greece’s growth and fiscal outlooks have improved alongside a labour market recov- ery and amid a period of relative policy certainty,” S&P said. “The positive outlook on Greece reflects further upside rating potential from the policy and financing environment over the next year.”

Eurozone finance ministers meeting today will assess Greece’s compliance with its bailout terms, and could sign off on loan dis€ bursements of about 6.7bil (US $8.2 bil).

The government in Athens hopes to follow that up with a bond sale in the coming weeks as it tries to build up a cash buffer for when the bailout expires in August.

Greek bonds have rallied since December as talks with eurozone and International Monetary Fund officials have progressed without the drama seen in previous bailout reviews.

The yield on benchmark 10-year bonds has fallen to 3.83% from more than 7% a year ago.

“Policy uncertainty in Greece has receded since 2015 and absent any large shifts in the policymaking environment – which have in the past weighed considerably on growth – we anticipate a stronger economic recovery will take root,” S&P said.

The upgrade is the first time in two years that S&P has changed Greece’s rating. Fitch Ratings upgraded Greece to B- in August, while Moody’s Investors Service rates the country Caa2. Each is below the junk threshold.