Major credit ratings agency, Standard and Poor’s (S&P) has given Greek debt a vote of confidence – raising its credit rating for the country in the belief it will meet its latest bailout conditions.
S&P confirmed Friday after stock markets closed that the country’s sovereign rating had been upgraded to B- from CCC+.
It also placed a ‘stable’ outlook on the rating.
That is despite tough negotiations lying ahead for the government of Alexis Tsipras and Athens’ international creditors.
Tsipras was returned to office in September following the country’s second General Election in nine months – a poll he demanded as Greeks mulled the price of further financial help.
His anti-austerity agenda – which won him popular support when he first took the top job – was tamed during the second election campaign by the real threat of his country being forced from the euro and wider EU.
While the coalition administration’s plans to meet its obligations have been met by continued public protests, the Greek economy has largely stabilised since six years of recession that saw its GDP contract by 25%.
However, a quarter of Greeks remain out of work and future generations face footing the bill for three bailouts – the latest of which has only been partly dispersed.
S&P’s statement – released shortly after European markets closed on Friday – said: “By the end of March, despite differences between the government and its creditors, we expect Greece to meet the conditionality attached to its €86bn financial support programme, opening the way for discussions on official debt relief.”
Debt relief is an area Greece has been keen to explore but formal discussions with the European Central Bank, eurozone leaders and the International Monetary Fund are yet to take place.
S&P also noted that Greece had made progress in recapitalising its large banks since capital controls were imposed last summer.
The agency also hailed moves by the government to trim its budget.
“Despite multiple shocks, the economy has proved more resilient than we previously expected,” S&P said.
The cost to the Greek government of servicing its debts fell below 10% in reaction to S&P’s move.
In March 2012, the 10-year debt yield was as high as 48% – indicating the complete lack of confidence there was at the height of the debt crisis that Greece would be able to pay its way.
Despite the country’s rating upgrade, it remains well within ‘junk’, or non-investment-grade, territory.