Fitch upgrades Greece’s debt rating to ‘BB-’ on European debt deal

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Credit ratings agency Fitch on Aug. 10 upgraded Greece’s sovereign debt one notch to ‘BB-’ from ‘B’ due to the recent deal with Europe to provide “substantial” debt relief.

The announcement, which still rates Greek debt as speculative, followed S&P Global’s decision last month to raise its outlook for Greece to “positive,” suggesting another upgrade could be coming soon.

Athens in June reached an agreement with its euro area creditors, allowing a 10-year extension for repaying much of its debts, which, at a 180 percent of GDP, are still the highest in the European Union.

The agreement will also allow Greece to exit its financial bailout program on August 20.

And after graduating from a European aid program, “The debt relief measures agreed at the 21 June Eurogroup are substantial,” Fitch said in a statement.

“We expect fiscal performance to remain sound over the post-program period,” the agency said, noting that the long-troubled economy posted a budget surplus of 0.8 percent of GDP last year, up from 0.6 percent the year before.

Fitch said Greece should see “sustained growth,” amid reduced political risks, while other fiscal measures adopted by lawmakers are due to take effect through 2020.

Based on a premise of 3.4 percent annual GDP growth, Greek debt should fall to 123.3 percent of GDP by 2030, down from 182.7 percent this year.

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