Ratings agency Standard & Poor’s (S&P) said yesterday it is no longer planning any imminent downgrade of the country’s debt because of government efforts to narrow its budget deficit. S&P affirmed Greece’s BBB+ rating, removing it from «creditwatch negative,» meaning the company is no longer considering a reduction to the grade in news that sent the euro and Greek bonds higher. S&P was, however, more cautious about Greece beyond 2010. «Despite the new measures, we think it will be difficult for Greece to comply fully with its planned consolidation path, reducing its deficit to 5.6 percent of GDP in 2011 and 2.8 percent of GDP in 2012, if it does not implement additional measures in the coming years,» it said in a statement. Shortly after S&P’s decision, the euro rose 0.6 percent to $1.3747, and the extra yield demanded by investors to hold 10-year Greek government paper instead of benchmark German bunds slid 16 basis points to 6.17 percent. The difference in yield between the Greek 10-year bond and the equivalent to the German security narrowed to 303 basis points, from 319 basis points on Monday. Speaking from Brussels yesterday, Finance Minister Giorgos Papaconstantinou said he expects Greece’s borrowing costs to decrease as the government’s plan to tackle budget problems gains credibility. «It’s clear that we are not happy to be paying the kind of markups and spreads that we’re paying at the moment,» he said. «But as we have stated all along, it’s a question of rebuilding credibility and it’s very clear now that this credibility is being rebuilt.» Meanwhile, ING Groep NV said that good news about Greek sovereign bond sales in the coming months will help to lower the nation’s yields and reduce the volatility on securities from other European peripheral countries. Greece «will succeed in raising cash through issuing bonds, which, in turn, will be supportive for the confidence in Greek bonds and also to lower Greek spreads,» Wilson Chin, a fixed-income strategist at ING in Amsterdam, wrote in a note.