Greek Credit Rating Raised at S&P After Debt Buyback Program

Greek Credit Rating Raised at S&P After Debt Buyback Program

Posted: athenswire

December 19, 2012

---

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, SP said in a statement yesterday. It was cut to
SD from CCC on Dec. 5 amid the buyback. The new grade is the
highest Greece has had at SP 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,? SP 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.?

Ratings Analysis

Yields on sovereign securities moved in the opposite
direction from what ratings suggested in 53 percent of the 32
upgrades, downgrades and changes in credit outlook this year,
according to data compiled by Bloomberg. The longer-term average
is 47 percent, based on more than 300 changes since 1974. This
year, investors ignored 56 percent of Moody?s rating and outlook
changes and 50 percent of those by SP.

Greek bonds have surged 85 percent this year, the best
performance among 26 markets tracked by indexes from the
European Federation of Financial Analyst Societies. The 10-year
yield at 12.8 percent is about a third of its high this year,
and its spread to benchmark German bunds has collapsed to about
11 percentage points, the least since April 2011.

SP said that Greece?s deficit-reduction plan, which is
based on tax increases, improved tax collection, privatizations,
and government spending cuts, may still go awry.

?We believe these adjustments carry implementation risks
given the projected further output contraction in 2012 and 2013,
which will likely see social pressures persist,? SP said.

To contact the reporter on this story:
Marcus Bensasson in Athens at
mbensasson@bloomberg.net

To contact the editor responsible for this story:
Craig Stirling at
cstirling1@bloomberg.net

Enlarge image

Greek Credit Rating Raised at SP After Debt Buyback

Chris Ratcliffe/Bloomberg

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.

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. Photographer: Chris Ratcliffe/Bloomberg

VN:F [1.9.7_1111]

Rating: 0.0/10 (0 votes cast)

VN:F [1.9.7_1111]

Article source: http://www.bloomberg.com/news/2012-12-18/greek-credit-rating-raised-at-s-p-after-debt-buyback-program.html

Source: http://www.athenswire.com/greek-credit-rating-raised-at-sp-after-debt-buyback-program/

bob weston bill obrien reggie mckenzie epiphany exorcism jersey shore season 5 mark driscoll