Tuesday, March 13, 2012

Fitch lifts Greece out of default territory after debt swap

Fitch lifted Greece's credit rating out of default territory, becoming the first major rating agency to take the widely expected move after Athens completed a debt swap that cut its debt by about 100 billion euros.

This is the first time Greece's rating has been upgraded since the debt crisis exploded at the end of 2009 and the first Fitch upgrade since 2003.

The three major rating firms have repeatedly slashed Greece's rating throughout the debt crisis, cutting it to default over the debt deal in which private bondholders lost most of their investments in Greek government bonds.

"The agency considers that significant and material default risk remains in light of the still very high level of indebtedness post-PSI," Fitch said in a statement, referring to the debt swap deal.

It said the implementation of reforms needed to bring Greece's debt down would be a challenge.

"Moreover, in the near term, the prospect of a general election and uncertainty over the composition and commitment of a new government to the EU-IMF programme also poses a significant risk," it said.

Greece is scheduled to organise general elections in end April or early May. The new B- rating has a stable outlook.