S&P raises Greece's credit rating

[4me2]

S&P raises Greece's credit rating


The Greek government is continuing with austerity measures despite protests




Ratings agency Standard and Poor's has raised the credit rating of Greece's sovereign debt by six levels, praising the "strong determination" of fellow European countries to help it stay in the eurozone.
S&P has increased Greece's rating from "selective default" to "B-minus".
The agency also praised the continuing efforts by Greece's government to cut its spending.
Greece is currently receiving the second of two bailouts.
Last week, Greece started to receive the latest tranche of the bailout funds from the European Union and International Monetary Fund.
They agreed to release 49.1bn euros ($57bn; £37bn) after continuing austerity work by Greece, and a buyback of some of its debt.
A total of 240bn euros has been earmarked for Greece from the two bailout loans.
So far, Greece has received nearly 149bn euros (£119bn; $191bn) from the eurozone and the International Monetary Fund, out of that 240bn euros.
S&P said in its statement: "The upgrade reflects our view of the strong determination of European Economic and Monetary Union (eurozone) member states to preserve Greek membership in the eurozone.
"The outlook on the long-term rating is stable, balancing our view of the government's commitment to a fiscal and structural adjustment against the economic and political challenges of doing so."
Greece had to seek the bailouts to meet its debt repayments after years of overspending meant it could not keep up with its debt obligations.
The negative market opinion of Greece's situation only worsened its position, as it pushed up the yield, or level of interest, that the the country had to offer on the sale of its new government bonds, in order to attract buyers.

http://www.bbc.co.uk/news/business-20773955

[Geko]

What's the real story behind this? It doesn't make much sense to me. They don't seem to be any better off than they were last year. Is it a carrot to keep them clinging to the Euro?

[4me2]

What's the real story behind this? It doesn't make much sense to me. They don't seem to be any better off than they were last year. Is it a carrot to keep them clinging to the Euro?

It is securing future loans at far lower interest rates so they get out of debt quicker.

[Geko]

It is securing future loans at far lower interest rates so they get out of debt quicker.

I understand that. But I can't see how they have achieved the change in credit rating. My friend got CCJ. He has been unable to get credit for years. Compare that to Greece. They were downgraded a couple of years ago? Now they are a lot safer investment? Doesn't make sense.

[hoponbaby]

Your friend didn't have someone else pretty much guaranteeing his debts

[Geko]

Your friend didn't have someone else pretty much guaranteeing his debts

Everyone knows a German.

Call me a cynic. But I smell something fishy with the regrading of Greece. I still wouldn't touch their bonds with a barge pole.


Edit - After reading a bit more on the subject. Seems although they have been raised 6 places to B-Minus. They are still worth shit. But they are no longer in default.

[mysterym]

It's because of debt write downs by bond holders and a target of debt equal to 125% odd of GDP by 2020. Plus all the Greek austerity and the ecb backstopping bond purchases.

Basically the danger of the euro going bang has diminished drastically, hence the reason why it back to risk on with equities. Go look at bank share prices over the last few month and you'll see that the markes believe there is a diminished risk.

[mysterym]

Everyone knows a German.

Call me a cynic. But I smell something fishy with the regrading of Greece. I still wouldn't touch their bonds with a barge pole.

You may not, but given the high interest rate it's a good return if future investors get there money back.

[Geko]

It's because of debt write downs by bond holders and a target of debt equal to 125% odd of GDP by 2020. Plus all the Greek austerity and the ecb backstopping bond purchases.

Basically the danger of the euro going bang has diminished drastically, hence the reason why it back to risk on with equities. Go look at bank share prices over the last few month and you'll see that the markes believe there is a diminished risk.

Yes. But share prices usually have little to do with the nuts and bolts of the matter and more to do with market confidence. This, in my opinion, is still a house of cards. Especially as we have a media blackout on all the riots in Spain, Italy and Greece that are rarely reported in Europe. Keeps the confidence artificially high.

You may not, but given the high interest rate it's a good return if future investors get there money back.

Yes. But... Re-grading them will make the interest returns lower. So the risk is therefore higher is it not?


I did edit my post above. Because I did some reading, and although they have been moved up 6 notches they are still in an area where their bonds are junk. So still very high risk. So... Maybe my cynicism was misplaced.

[4me2]

Everyone knows a German.

Call me a cynic. But I smell something fishy with the regrading of Greece. I still wouldn't touch their bonds with a barge pole.


Edit - After reading a bit more on the subject. Seems although they have been raised 6 places to B-Minus. They are still worth shit. But they are no longer in default.

Maybe you should have read the article and not just the title before initially posting.

[Geko]

Maybe you should have read the article and not just the title before initially posting.

I did. But at the time B-minus meant nothing to me. The bottom of the article also implied stability. I personally blame BBC spin.

[4me2]

I did. But at the time B-minus meant nothing to me. The bottom of the article also implied stability. I personally blame BBC spin.

I personally blame your laziness to read articles before commenting on them.