S.& P. Raises Greek Credit Rating to B- From ‘Selective Default’

The agency said the upgrade to B-, the highest grade it has given Greece since June 2011, reflected its view that the other 16 European Union countries using the euro are determined to keep Greece in the currency union.

It also gave Greece a stable outlook, meaning it is less likely to change its rating again soon.

“The stable outlook balances our view of euro zone member states’ determination to support Greece’s euro zone membership and the Greek government’s commitment to a fiscal and structural adjustment against the economic and political challenges of doing so,” the agency said in a statement.

Greece’s finance minister welcomed the upgrade. “It’s a decision that creates a mood of optimism, but we are well aware that we still face a long uphill course ahead,” the minister, Yannis Stournaras, said. “We are not relaxing in our efforts.”

An upgrade was expected since S. P. this month had temporarily lowered Greece’s rating to the bottom of its scale — “selective default” — because the country was buying back its own debt. The agency said that because the buyback had not forced any investors to sell their bonds back — which would have constituted a default — it was raising the rating back up.

The bond buyback was successfully completed last week, and will reduce the country’s debt by about $26 billion.

The size of the upgrade suggests European leaders are seeing results in bringing Greece’s debt load under control. But the credit rating is steadily losing relevance as there are few private investors still holding Greek bonds. Greece today owes most of its debt to euro zone states, the International Monetary Fund and the European Central Bank.

Article source: http://www.nytimes.com/2012/12/19/business/global/s-p-raises-greek-credit-rating-to-b-from-selective-default.html?partner=rss&emc=rss