S&P upgrades Greek credit rating ahead of vote today

 
Caitlin Morrison
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Greek citizens are currently dealing with heavy restrictions on their bank accounts
STANDARD & Poor’s yesterday upgraded its foreign and local currency long-term sovereign credit ratings on Greece to CCC+ from CCC-, and said the outlook for the country is stable.

The ratings agency said the change “reflects Greece’s improved liquidity perspective”, following the agreement reached with the Eurogroup last week regarding a three-year loan programme for Greece, via the European Stability Mechanism, along with the provision of €7.16bn (£5bn) in bridge financing to the Greek government.

S&P said it no longer thinks a Greek default is “inevitable in the next six to 12 months”, but still considers “that Greece’s solvency over the next few years remains dependent on favourable business, financial, and economic conditions”, as well as any forthcoming funding relief on its official liabilities.

Greece’s financial commitments appear to be unsustainable over the long term, the ratings agency said, adding that it believes the probability of the country leaving the Eurozone remains higher than one in three but less than 50 per cent.

Meanwhile, Greek Prime Minister Alexis Tsipras tried to rally his party yesterday ahead of a vote being held today in the country’s parliament on the second package of measures demanded by international creditors to open talks on a new bailout deal.

Tsipras has faced a revolt in the left-wing Syriza party over the mix of tax hikes, market reforms and spending cuts demanded by lenders but is expected to get the package, which could unlock up to €86bn in new loans, through parliament with the help of pro-European opposition parties.

“Until today, I’ve seen reactions, I’ve read heroic statements, but I haven’t heard any alternative proposal,” he said, warning that party hardliners could not ignore the desire of most Greeks to remain in the euro.

He added: “Syriza as a party must reflect society, must welcome the worries and expectations of tens of thousands of ordinary people who have pinned their hopes on it.”

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