Greece had its credit rating raised by Standard & Poor’s after a debt buyback as the ratings company cited the “strong determination” of euro-area governments to keep the nation in the currency zone.
The grade was lifted from selective default to B- with a stable outlook, S&P said in a statement today. It was cut to SD from CCC on Dec. 5 amid the buyback. The new grade is the highest Greece has had at S&P since June 2011, when it was cut to CCC from B.
“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 ratings company said.
European officials last week approved the payout of 49.1 billion euros ($65 billion) of loans through March from Greece’s bailout programs with the European Union and International Monetary Fund after receiving the results of the Greek bond buyback program. Under the plan, Greece agreed to pay 11.3 billion euros to buy back 32 billion euros of bonds, reducing its debt burden.
“Even after the buyback, Greece’s end-2012 net debt-to-GDP ratio of over 160 percent of GDP remains onerous,” S&P said in the statement. “Nevertheless, subject to Greece meeting program conditions, euro zone member states have said they would significantly improve official lending terms to the government.”
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