Greek economy wins new vote of confidence with credit rating upgrade and hopes for investment boost

ATHENS, Greece (AP) — Greece won new certification of its financial health Friday, as Standard & Poor’s became the first of the three major international ratings agencies to upgrade the formerly struggling country’s credit rating to investment grade.

The one-notch upgrade, from BB+ to BBB-, is expected to significantly boost market confidence in the Greek economy, attracting investment and lowering borrowing costs. The center-right government hailed it as a major success.

It came more than a decade after Greece’s bonds were relegated to sub-investment — or junk — grade amid the financial crisis that pushed the country to the brink of financial collapse and forced three massive international bailouts.

To secure the rescue loans, successive Greek governments undertook to impose painful spending cuts and tax hikes while broadly reforming the economy and balancing the state budget.

S&P said Greece’s outlook was stable, while a further reduction in the country’s debt as a percentage of annual output could prompt a new future upgrade.

“Supported by a very rapid economic recovery, the Greek government has been able to regularly outperform its own budgetary targets despite gradually increasing social transfers,” S&P said.

Securing investment grade was a key target for Prime Minister Kyriakos Mitsotakis, who won a second term in office in a landslide election victory in June.

Finance Minister Kostis Hatzidakis hailed the S&P upgrade late Friday, while pledging to maintain prudent budgetary policies.

“The country faces a historic window of opportunity through a combination of the right economic policy mixture with political stability,” he said.

In early September, ratings agency DBRS Morningstar also upgraded Greece’s credit rating to investment grade. Days afterwards, an upgrade by Moody’s raised the country’s bonds to just one notch inside junk territory.

Moody’s, Standard and Poor’s, DBRS and Fitch are the four ratings agencies taken into account by the European Central Bank — with Fitch expected to reassess Greece’s rating by the end of the year.