(Bloomberg) -- Greece's sovereign credit rating was raised one level by S&P Global Ratings, helping the government's plans to continue a bond-market comeback this year.
The country's long-term foreign currency debt was upgraded to B with a positive outlook from B-, S&P said in a statement on Friday. The new ranking remains five levels below investment grade.
“Greece's growth and fiscal outlooks have improved alongside a labor market recovery and amid a period of relative policy certainty,” S&P said. “The positive outlook on Greece reflects further upside rating potential from the policy and financing environment over the next year.”
Euro-area finance ministers meeting on Monday will assess Greece's compliance with its bailout terms, and could sign off on loan disbursements of about 6.7 billion euros ($8.2 billion). The government in Athens hopes to follow that up with a bond sale in the coming weeks as it tries to build up a cash buffer for when the bailout expires in August.
Read more: Greece's 10-Step Road Map to Bailout Program Exit in August
Greek bonds have rallied since December as talks with euro-area and International Monetary Fund officials have progressed without the drama seen in previous bailout reviews. The yield on benchmark 10-year bonds has fallen to 3.83 percent from more than 7 percent a year ago.
“Policy uncertainty in Greece has receded since 2015 and absent any large shifts in the policymaking environment -- which have in the past weighed considerably on growth -- we anticipate a stronger economic recovery will take root,” S&P said.
The upgrade is the first time in two years that S&P has changed Greece's rating. Fitch Ratings upgraded Greece to B- in August, while Moody's Investors Service rates the country Caa2. Each is below the junk threshold.
--With assistance from Brian Chappatta and Lananh Nguyen
To contact the reporter on this story: Marcus Bensasson in Athens at mbensasson@bloomberg.net.
To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Benjamin Purvis
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