S&P could upgrade Greece ‘pretty quickly’
Standard and Poor’s could upgrade Greece’s rock-bottom credit rating “pretty quickly” if Tuesday’s plan for a third eurozone bailout in five years looks like holding, the rating agency’s top European sovereign analyst said.
Moritz Kraemer told Reuters that although the firm’s longer-term base case remained that Greece would end up leaving the euro, the deal had reduced the immediate risk of that and could lead to an upgrade from its CCC- grade in the next week or two.
“It could happen pretty quickly,” Kraemer said.
“If you have a solid program that we think is conducive to bringing growth back to the economy and allowing the financial system to work again, then this is more important than the medium-term debt sustainability question.”
A key issue now for Kraemer and S&P is whether the Greek government can push the deal through Parliament without losing its majority, a move that would force it to either step aside or reshape.
But while the eurozone’s bitter negotiations had tarnished the bloc’s image, Kraemer said S&P would not start automatically factoring in a premium for a risk that any country could now potentially leave the euro.
“No I don’t think we do [have to systematically factor in national currency redomination risk],” Kraemer said.
“I think Greece is not only rating-wise but also other respects in a league of its own in the eurozone. We have made no change in our Grexit probability although the time frame may have been lengthened.”
[Reuters]
