S&P upgrades Greece's rating after debt buy-back

LONDON (ShareCast) - Standard & Poor's (S&P) has taken Greece off 'selective default' (SD) raising it's long-term rating to 'B-' thanks to recent indications that the Eurozone is determined to back Athens and keep the country in the euro.

Specifically, S&P raised its long-term foreign and local currency sovereign credit ratings on Greece to "B-" from "SD" (selective default) and also increased the short-term foreign and local currency sovereign credit ratings to "B" from "SD". The outlook is now 'stable'.

The credit agency justified the action based on the distressed debt buy-back completed on December 17th along with the following Eurogroup (finance ministers from the euro area) approval of the bailout tranche disbursement.

"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 said in the report.

The agency explained that the stable outlook balances its view of the "Eurozone member states' determination to support Greece's Eurozone membership and the Greek government's commitment to a fiscal and structural adjustment against the economic and political challenges of doing so."