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S&P could upgrade Greece 'pretty quickly' if deal sticks

By Marc Jones
July 14, 2015 10:24 IST
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A key issue now for Kraemer and S&P is whether the Greek government can push the deal through parliament without losing its majority, a move that would force it to either step aside or reshape.

A man reads the front pages of various newspaper hanging at a kiosk in Athens, Greece. Photograph: Yannis Behrakis/Reuters

Standard and Poor's could upgrade Greece's rock bottom credit rating "pretty quickly" if Monday's plan for a third euro zone bailout in five years looks like holding, the rating agency's top European sovereign analyst said.

Moritz Kraemer told Reuters that although the firm's longer-term base case remained that Greece would end up leaving the euro, the deal had reduced the immediate risk of that and could lead to an upgrade from its CCC- grade in the next week or two.

"It could happen pretty quickly," Kraemer said.

"If you have a solid programme that we think is conducive to bringing growth back to the economy and allowing the financial system to work again, then this is more important than the medium-term debt sustainability question."

A key issue now for Kraemer and S&P is whether the Greek government can push the deal through parliament without losing its majority, a move that would force it to either step aside or reshape.

But while the euro zone's bitter negotiations had tarnished the bloc's image, Kraemer said S&P would not start automatically factoring in a premium for a risk that any country could now potentially leave the euro.

"No I don't think we do (have to systematically factor in national currency re-domination risk)," Kraemer said.

"I think Greece is not only rating-wise but also other respects in a league of its own in the euro zone.

"We have made no change in our Grexit probability although the timeframe may have been lengthened."

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