Greece Gets Ratings Upgrade For Fiscal Progress
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Fitch Ratings on Tuesday upgraded Greece’s sovereign credit rating to ‘B-‘ from ‘CCC’, citing the country’s progress in rebalancing the economy, while achieving some “semblance of political and social stability.”
Though Greece’s credit status still remains six levels below investment grade, the one-notch upgrade reflected the improved outlook on the economy, which has languished in junk territory since 2010.
Fitch Ratings on Tuesday upgraded Greece’s sovereign credit rating to ‘B-‘ from ‘CCC’, citing the country’s progress in rebalancing the economy, while achieving some “semblance of political and social stability.”
Though Greece’s credit status still remains six levels below investment grade, the one-notch upgrade reflected the improved outlook on the economy, which has languished in junk territory since 2010.
Fitch also set Greece’s rating outlook as ‘stable’, meaning the risks of another upgrade or downgrade are balanced.
[quote]“The Greek economy is rebalancing,” Fitch said. “Clear progress has been made toward eliminating twin fiscal and current account deficits and ‘internal devaluation’ has at last begun to take hold.”[/quote]Greece’s so-called Economic Adjustment Program is also “on track” and the increase in its ratio of public debt to gross domestic product should moderate to peak at around 180 percent in 2013-14, the rating agency added, according to Bloomberg.
Nonetheless, Fitch warned that “tangible economic recovery remains elusive,” especially when “resistance to reform is high” among the population.
“The price (of Greece’s fiscal consolidation) has been high in terms of lost output and rising unemployment and the capacity for recovery is still in doubt,” the rating agency said.
[quote]“Nonetheless, sovereign debt relief and an easing of fiscal targets have lifted Central Bank measures of economic sentiment to a three-year high and the risk of eurozone exit has receded,” they added.[/quote]Related: Greece to Return to Growth in 2014, Predicts Troika
Related: Greek Finance Minister Says the Worst of Crisis is Over
Related: Greece Eyes $2 Billion Investment, 2,000 New Jobs From Europe Gas Pipeline Deal
Fitch said it expected Greece to have a milder recession this year of 4.3 percent, before a weak recovery in 2014. The news of the rating upgrade saw Greece’s 10-year bond yields on Tuesday dropped to their lowest level since the country first took a bailout in 2010. In addition, it brings some relief to Athens before it plans to return to the bond market as early as the first half of next year.
According to the Associated Press, Prime Minister Antonis Samaras will now embark on a three-day visit to China, followed by a stop in Azerbaijan, to promote investments in Greece. Meanwhile, before its return to the bond market next year, Greece is holding regular short term debt auctions, including a 13-week debt auction on Tuesday, which saw the second lowest rate in 28 equivalent auctions since 2011.
