This News is Not a Joke! “Fitch Upgrades Greece at Six Notches”

That’s not a joke! Ratings agency Fitch upgraded Greece on Tuesday to a “B-” rating with a stable outlook from restricted default over its bond swap that wiped some 100 billion euros ($131 billion) off its debt. Are things going indeed better, after the PSI? Because I hear, some friends have not been paid for working 40 hours per week, four weeks per month, since last August….

DOW JONES NEWSWIRES

Fitch Ratings on Tuesday upgraded Greece’s sovereign-debt rating only days after placing it in restricted default, saying the completion of a debt-restructuring deal has ended the default event.

Fitch’s rating was raised to B-minus, a junk-level rating six levels below investment-grade territory. The outlook is stable.

Fitch said there was 96% participation in the debt deal, which was completed Friday and allowed Greece to significantly reduce its borrowing by exchanging its debts for new securities at a lower value. Its creditors were required to take sizeable losses to their bond values as part of the deal.

A panel of market participants ruled that the restructuring constituted a credit event and would trigger insurance-like contracts that pay off if creditors suffer losses. On Friday, both Fitch and Moody’s Investors Service declared Greece in default. They joined Standard & Poor’s Ratings Services, which declared Greece in selective default about two weeks ago.

Fitch says the debt exchange and the losses imposed on bondholders have significantly improved Greece’s debt-service profile and reduced the risk of a recurrence of near-term repayment difficulties on the new Greek securities. But, the ratings firm said significant and material default risk remains in light of a still very high level of debt and profound economic challenges facing Greece.

The historic EUR200 billion ($266 billion) debt restructuring deal will cut about EUR100 billion from the face value of the debt-strapped country’s obligations. Yet, Greece remains mired in a long recession; unemployment is at 21%; and even after the write-off, the debt level is well in excess of a year’s economic output. (Wall Street Journal)