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The sovereign credit ratings of Greece and other PIIGS from the major ratings agencies have generally gone in one direction in recent years. Downward and onward. This is almost hard to believe on the surface, but Fitch Ratings has actually just upgraded Greece’s credit ratings. Fitch is raising Greece to “B-” from “CCC” and the Short-term foreign currency IDR has also been raised to “B” from “C” and while the Country Ceiling was raised to “B” from “B-” in the call. The Outlook on the Long-term IDRs is Stable.

Many factors were cited. The degree of default risk for private creditors has subsided above the “CCC” rating. The Economic Adjustment Programme is on track while there is a semblance of political and social stability. Greece’s primary fiscal adjustment of over 9% of GDP in 2009 to 2012 was called the most ambitious instance of fiscal consolidation among advanced economies in recent times. Fitch also maintains that structural reforms are progressing. It even went as far as to say that extensive debt restructuring has put funding on a more secure footing.

Greece’s sovereign ratings are underpinned by its still high income per capita. Today’s rating report said, “The Greek economy is rebalancing: clear progress has been made towards eliminating twin fiscal and current account deficits and ‘internal devaluation’ has at last begun to take hold. The price has been high in terms of lost output and rising unemployment and the capacity for recovery is still in doubt. Nonetheless, sovereign debt relief and an easing of fiscal targets have lifted Central Bank measures of economic sentiment to a three-year high and the risk of eurozone exit has receded.”

We are seeing a small move as a result of the upgrade. The ADRs in New York trading for National Bank of Greece SA (NYSE: NBG) had been down and now they are flat at $1.54 after trading as high as $1.60. Global X FTSE Greece 20 ETF (NYSE: GREK) is also now up about 1.8% at $20.02 in mid-day trading.

FULL FITCH UPGRADE