GREECE: Credit ratings agency Moody’s on Friday raised Greece’s long-term issuer rating to “Caa2” from “Caa3” after euro zone governments extended a credit lifeline to the country.
Moody’s also changed its outlook to “positive”, up from “stable” previously, saying it saw signs that the heavily indebted country’s economy was stabilizing.
It pointed to a mid-June agreement reached by Greece’s creditors to re-launch an aid plan to the country, which had been blocked for months due to disagreements between euro zone countries — especially Germany — and the International Monetary Fund.
The move reduces the spectre of a short-term crisis, after euro zone governments agreed to give Greece a new credit lifeline of some 8.5 billion Euros ($9.5 billion).
Moody’s said it expected Greece’s debt ratio to stabilize this year at 179 percent of GDP, adding that growth should return to the economy this year and next.
Greece returned to growth in the first quarter of 2017, with a 0.4 percent increase in GDP, according to figures revised upwards in early June.
“It is too early to conclude that economic growth will be durable,” Moody’s said.
The IMF, which links financial aid to debt relief, has also signed an “agreement in principle” to allow immediate assistance that avoids a payment crisis in Athens this summer.
It said Thursday that negotiations with creditors for debt reduction had “made progress”.
“If we did not think there was a good chance of reaching a debt deal, we would not have chosen that route,” an IMF spokesman said.
Moody’s also raised the long-term country ceilings for foreign-currency and local-currency bonds to B3 from Caa2.