Standard & Poor’s raises Greece’s rating by six levels

Credit rating agency Standard & Poor's has raised Greece's rating from 'selective default' to 'B-minus'.

In a statement, the agency said that the upgraded reflected its view of "the strong determination of European Economic and Monetary Union (eurozone) member states to preserve Greek membership in the eurozone.     

"The outlook on the long-term rating is stable, balancing our view of the government's commitment to a fiscal and structural adjustment against the economic and political challenges of doing so," S&P added.

The agency said that its action reflected the completion of Greece's distressed debt buyback in tandem with approval by the Eurogroup of a loan disbursement to Greece under the second economic adjustment program.

"We view the eurozone member states' decision to provide material cash flow relief to Greece as indicative  of their determination to restore stability to Greek finances, and to preserve  Greece's eurozone membership," S&P added. 

The Economic Adjustment Program for Greece is scheduled to end in 2014, based on the assumption that Greece will be able to return to issuing medium- and long-term commercial debt by 2015.

"In our view, however, Greece's access to  long-term commercial funding remains subject to numerous domestic and external  uncertainties," S&P said. The Eurogroup has today released €34.3 billion to Greece, €16 billion of which will be used to increase Greek banks' regulatory capital.

"The Greek government is likely to keep meeting a portion of its financing needs by issuing Treasury bills, and we anticipate the freshly recapitalized domestic banks will be important buyers of these."

S&P added that could raise its long-term rating on Greece if the government follows through fully on its steps to comply with the EU/IMF program, thereby  restoring predictability to its policymaking as well as contributing to a  sustained economic recovery and improved prospects of sustainable  debt-servicing. 

"We could lower the ratings if we believe that there is a likelihood of a distressed exchange on Greece's remaining stock of commercial debt," it added.