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Greek Debt Raised Out of Default by S&P

02 May 2012

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Anti-austerity protest by Greek construction workers in Athens


BBC

Greece has had its government debt rating raised out of default by credit rating agency Standard & Poor's.

S&P upgraded the crisis-hit nation to "CCC" from "selective default" after the country completed the biggest debt restructuring in history earlier this year, reports the BBC.

"While the exchange has, in our view, alleviated near-term funding pressures, Greece's sovereign debt burden remains high," it said.

Greece has been bailed out twice.

The nation received loans totalling 110bn euros in 2010 and, following the debt restructuring, secured another 130bn euros in March 2012 from the eurozone and International Monetary Fund.

The rating of CCC means, according to S&P, that Greece is "currently vulnerable and dependent on favourable business, financial and economic conditions to meet financial commitments".

In March, rival agency Fitch also raised its rating of Greece out of default.

The country goes to the polls for national elections on Sunday, and has been racked by continual street protests over its austerity cuts.

"The fiscal consolidation underway is largely premised on tax hikes and improved tax collection, an extensive privatisation programme, and wholesale cuts in government spending," S&P said.

"We believe this adjustment has implementation risks given the likely further contraction of the sovereign's GDP this year and next, which will likely result in persistent social pressures."

The aim is to cut the Greek government's total indebtedness from 160% of GDP now to 120.5% by 2020.

To get the second bailout, in February, Greece agreed with most creditors to cut its debt burden in half.

It worked out a cut of 53.5% in nominal terms - which works out to a real loss of about 74% after taking into account the loss of future interest payments.

Tags: Business, Nigeria, Featured, Greek Debt

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