Greece debt cloud lightens on S&P upgrade

Standard and Poor's has raised its rating on Greece's sovereign debt by six notches.

In a move which will raise hopes the European Union will survive the debt crisis, the ratings agency raised Greece's rating from selective default to B-minus.

S&P praised the efforts of the Hellenic Republic - which has received two bailouts - to cut spending, along with the determination of fellow eurozone countries to help preserve the Union.   

In an accompanying statement S&P said: 'The upgrade reflects our view of the strong determination of European Economic and Monetary Union 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.'

Lee McDarby of Investec Corporate Treasury drew optimism from the upgrade.

'After what seems an eternity in the shadow of a debt burden, Greece finally stepped towards the light yesterday as ratings agency S&P raised its crediting rating to B- from selective default,' McDarby said.  

However, he said there was a long way to go before Greece is totally out of the woods.

'The peripheral Euro state was also given the stamp of having a stable outlook driven by the strong determination of the collective Euro-zone governments to keep the nation in the shared currency. More importantly it comes off the back of Greece’s debt buyback programme,' McDarby said.  

'Under the programme, Greece have agreed to pay €11.3n to buy back €32 billion of bonds, assisting in reducing its debt burden. A much needed effort but more still needs to be done as Greece’s debt to GDP ratio remains over 160%.'