S&P refrains from raising Greece’s credit rating citing election risks
Standard & Poor’s stopped short of raising Greece’s sovereign rating on Friday, affirming it at B+ with a positive outlook, although the market had widely anticipated an upgrade.
In a scheduled rating decision S&P praised Greece’s fiscal progress and noted the favorable debt restructuring it has secured, but referred to various risks including a possible backtracking of financial reforms ahead of the upcoming general election, as well as to the international environment that generates uncertainties.
S&P’s rating for Greece this remains four notches below investment grade,deep into junk territory.
The market had expected an upgrade by at least one level that would facilitate the government’s plans for another market foray next month, following the drop in Greek bond yields.
In January Greece performed its first major bond issue after emerging from the bailout program last August with a five-year note, followed in early March by a benchmark 10-year issue. Since then yields have been in decline, dropping to a 13-year low earlier this month. On Friday the benchmark 10-year bond yield stood at 3.30 percent.
All other major rating agencies have also kept Greece in junk status, as Moody’s has given Greece a B1 rating while Fitch has retained its BB- rating since last August, just before Greece emerged from its last bailout program. Next Friday DBRS is expected to issue a new rating decision.
