FT: Moody upgrades Greece’s debt rating

Moody’s, the international rating agency, has upgraded Greece by two notches, reflecting good progress with fiscal consolidation despite continued recession and fragile political stability.

   The upgrade from Caa3 to single C with a stable rating still leaves Greek sovereign bonds deep in junk territory, but supports the coalition government’s forecast of a primary budget surplus this year before debt repayments, rising to 1.5 per cent of output in 2014.

   “Moody’s expects that the government will achieve (and possibly outperform) its target of a primary balance in 2013, and record a surplus in 2014 in accordance with the adjustment programme,” the agency said.

   A senior finance ministry official said on Friday that on the basis of 10-month revenue figures, Greece could achieve a primary surplus of close to €1bn this year. An improved medium-term outlook and lower interest payments following last year’s restructuring of privately held Greek debt also contributed to the upgrade, Moody’s said.

   The economy is bottoming out but will shrink by another 0.5 per cent in 2014 before growing by 1.0 per cent in 2015, it said. The EU and the Greek government both forecast an earlier recovery with growth of around 0.5 per cent next year after six straight years of recession.

(Source: www.ft.com)