Credit rating agency Standard & Poor’s yesterday upgraded Greece’s long-term rating by a notch to «A+» as it cited the country’s progress on both the fiscal and structural reform fronts. S&P also affirmed its «A-1» short-term sovereign credit rating on Greece and said the outlook was stable. The upgrade came nearly eight months after Moody’s elevated Greece to «A2» from «A1.» S&P credit analyst David Cooling said the upgrading reflected improvements in three areas: Greece has succeeded in narrowing its general government deficit for seven consecutive years, despite revisions by Eurostat in 2001 and 2002 which jacked up the general government deficit. Further progress along this direction could see Greece posting a balanced general government budget in 2006, he predicted. S&P also pointed to Greece’s sustained real and nominal convergence with other eurozone members, noting that «real per-capita-income growth is forecast to average 3.5 percent annually over the medium term, against little more than 1 percent for the eurozone.» It cited Greece’s commitment to further structural reforms and said that last year’s pension reforms «are a significant first step and indicative of an increasing acceptance of the economic adjustments needed to close the gap with other EU economies.» S&P’s upgrade had been anticipated by the market for some time, said George Kofinakos, general director at Citigroup Global Market. «The spread between German 10-year bunds and similar Greek paper has been very tight over the past week, suggesting that market makers feel Greece should be upgraded,» he said. While the upgrade is not expected to dramatically lower borrowing costs for Greece, the news is significant, as it means the country has three years to improve its standing before stricter Basle II rules on provisions come into effect in 2006, he said. Equally important, the higher sovereign rating could pave the way for corporate upgrades as well, Kofinakos said. Five companies, among them National and Alpha banks and OTE, could see their ratings go up, allowing them to borrow more cheaply, he said.