S&P rates Greece back up to "B-" status

[Q]

Seemingly out of the blue Standard and Poor puts up the rating of Greece again by 6 notches, to "B-" (http://www.cnbc.com/id/100324997):


Greece Rating Upgraded From 'Selective Default' by S&P

Rating agency Standard & Poor's on Tuesday raised Greece's sovereign credit rating to B-minus with a stable outlook from selective default, citing its European partners' efforts to keep the country part of the euro.

"The upgrade reflects our view of the strong determination of European Economic and Monetary Union (eurozone) member states to preserve Greek membership in the eurozone," S&P said.

"The outlook on the long-term rating is stable, balancing our view of the government's commitment to a fiscal and structural adjustment against the economic and political challenges of doing so," the agency added.

Euro zone partners and the International Monetary Fund have agreed to unlock 49.1 billion euros in aid by the end of March. The decision to release the long-delayed installment came after Athens passed austerity measures and completed a debt buyback.

Where did this come from? Is it a re-evaluation of the EU integration process that has fast-tracked in the last few years and is still ongoing? Is it the result of a much more specific policy change? Is it something else?

Either way, it suddenly seems much more unlikely that a "Grexit" will happen as future loans will most likely happen at a lower interest. The catastrophists on the left, predicting an imminent Euro meltdown, seem to be proven wrong, although it is early to tell for sure.

More importantly, if true, it might very well translate into a boost for those bourgeois wings arguing further integration of the EU. This in turn calls communists to think about posing a positive programme regarding the European question, such as the following: Democratic demands, a pan-Europe workers movement, a pan-Europe party-movement, a European Democrtic Republic.

[Geiseric]

it seems like they're trying to milk the speculative cow for all its worth. Derivatives, yay! Leftists should dedicate to organizing in their own countries around actual issues rather than fantasizing about a "pan europe workers movement," seeing as most countres lack a workers party of any sort. However the new investments will be traded like most other investments are these days.

[Lynx]

More austerity will only continue the destruction of the Greek economy, and their deficit projections will be exceeded - again. After the Great Financial Collapse, who would trust these agencies?

[Q]

it seems like they're trying to milk the speculative cow for all its worth. Derivatives, yay! Leftists should dedicate to organizing in their own countries around actual issues rather than fantasizing about a "pan europe workers movement," seeing as most countres lack a workers party of any sort. However the new investments will be traded like most other investments are these days.

Yeah, let's all be "practical" and stop "dreaming" about proletarian internationalist strategical ways forward :rolleyes:


More austerity will only continue the destruction of the Greek economy, and their deficit projections will be exceeded - again. After the Great Financial Collapse, who would trust these agencies?

I doubt that the new trust of S&P reflects a real recovery in the Greek economy. My bet is that S&P is much more looking to how Europe as a whole is shaping up. But I haven't found a real reasoning yet.

[Prof. Oblivion]

You can get more information in this article on the S&P website (quoted below) and on this regulatory/disclosures page (http://www.standardandpoors.com/ratings/view-pcr/en/us/?pcrId=HPCR-24045.1&coreOrgId=110074&coreRatingId=399391654&entityId=270242) (login required but free).


Ratings On Greece Raised To 'B-/B' From Selective Default On Completion Of Debt Buyback; Outlook Stable

Greece has completed a distressed debt buyback.
Following completion of the transaction, we are raising our long- and short-term sovereign credit ratings on Greece to 'B-/B' from 'SD' (selective default).
The upgrade reflects our view of the strong determination of European Economic and Monetary Union (eurozone) member states to preserve Greek membership in the eurozone.
The outlook on the long-term rating is stable, balancing our view of the government's commitment to a fiscal and structural adjustment against the economic and political challenges of doing so.

LONDON (Standard & Poor's) Dec. 18, 2012--Standard & Poor's Ratings Services today raised its long-term foreign and local currency sovereign credit ratings on the Hellenic Republic (Greece) to 'B-' from 'SD' (selective default). We also raised our short-term foreign and local currency sovereign credit ratings on Greece to 'B' from 'SD'. As a result, we have raised the ratings on all the outstanding issues, including those guaranteed by Greece, to 'B-/B'. The outlook is stable. The rating action reflects the completion on Dec. 17, 2012, of Greece's distressed debt buyback (see "Greece Ratings Lowered To 'SD' (Selective Default) (http://www.standardandpoors.com/fgr_article/en/us?object_id=7686838&rev_id=1)," published Dec. 5, 2012, on RatingsDirect on the Global Credit Portal), in tandem with approval by the Eurogroup (the finance ministers of EU member states belonging to the eurozone) of a loan disbursement to Greece under the second economic adjustment program. We view the eurozone member states' decision to provide material cash flow relief to Greece as indicative of their determination to restore stability to Greek finances, and to preserve Greece's eurozone membership. Our criteria define the emergence from a sovereign default (short of resuming payment on the defaulted instrument) as the successful completion of an exchange offer or buyback. As the Greek buyback applied to only part of an issue--because some holders declined to participate in the transaction--we are raising the ratings on the original securities that remain outstanding. This reflects our opinion that Greece will likely continue to pay full debt service as originally contracted. Under our criteria, the 'SD' credit ratings of a sovereign government emerging from default are replaced by new ratings reflecting our revised view of that sovereign's creditworthiness (see Appendix B in "Sovereign Government Rating Methodology and Assumptions (http://www.standardandpoors.com/fgr_article/en/us?object_id=6693946&rev_id=7)," June 30, 2011). We estimate €6.8 billion in foreign-law-governed bonds held in the market was not tendered in the March 2012 Greek commercial debt restructuring. If Greece's official debt were written-down--which could happen if Greece were to apply for a third European Stability Mechanism program in 2013 or 2014--eurozone official creditors may seek comparability of treatment for holders of outstanding foreign-law-governed bonds. Even after the buyback, Greece's end-2012 net debt-to-GDP ratio of over 160% of GDP remains onerous. Nevertheless, subject to Greece meeting program conditions, eurozone member states have said they would significantly improve official lending terms to the government. The improved terms would include maturity extensions on bilateral and EFSF loans on top of a 10-year deferral of Greek interest payments to the EFSF: an effective write down of the Greek public debt stock in net present value terms, assuming nominal GDP growth starts gradually recovering from 2014. The Economic Adjustment Program for Greece is scheduled to end in 2014, based on the assumption that Greece will be able to return to issuing medium- and long-term commercial debt by 2015. In our view, however, Greece's access to long-term commercial funding remains subject to numerous domestic and external uncertainties. The Eurogroup has today released €34.3 billion to Greece, €16 billion of which will be used to increase Greek banks' regulatory capital. The Greek government is likely to keep meeting a portion of its financing needs by issuing Treasury bills, and we anticipate the freshly recapitalized domestic banks will be important buyers of these. Greece's fiscal consolidation is largely premised on tax hikes and improved tax collection, an extensive privatization program, and wholesale cuts in government spending (adopted in November 2012). We believe these adjustments carry implementation risks given the projected further output contraction in 2012 and 2013, which will likely see social pressures persist. Badly needed net equity inflows into the real economy have not yet materialized in any material fashion. In this regard, the government has repeatedly failed to meet its privatization receipt targets--one reason behind this year's increased financing needs. At the same time, we believe a better-capitalized banking system and indications of a gradual restoration in private sector competitiveness could improve prospects in 2013 for Greece's more competitive sectors, particularly tourism. The stable outlook balances our view of eurozone member states' determination to support Greece's eurozone membership and the Greek government's commitment to a fiscal and structural adjustment against the economic and political challenges of doing so. We could raise our long-term rating on Greece if the government follows through fully on its steps to comply with the EU/IMF program, thereby restoring predictability to its policymaking as well as contributing to a sustained economic recovery and improved prospects of sustainable debt-servicing. We could lower the ratings if we believe that there is a likelihood of a distressed exchange on Greece's remaining stock of commercial debt. RELATED CRITERIA AND RESEARCH

Greece Ratings Lowered To 'SD' (Selective Default) (http://www.standardandpoors.com/fgr_article/en/us?object_id=7686838&rev_id=1), Dec. 5, 2012
Sovereign Government Rating Methodology And Assumptions (http://www.standardandpoors.com/fgr_article/en/us?object_id=6693946&rev_id=7), June 30, 2011
Criteria For Determining Transfer And Convertibility Assessments (http://www.standardandpoors.com/fgr_article/en/us?object_id=5402435&rev_id=8), May 18, 2009
Rating Implications Of Exchange Offers And Similar Restructurings (http://www.standardandpoors.com/fgr_article/en/us?object_id=5402557&rev_id=4), Update, May 12, 2009
Introduction Of Sovereign Recovery Ratings (http://www.standardandpoors.com/fgr_article/en/us?object_id=4222708&rev_id=9), June 14, 2007
Criteria For Assigning 'CCC+', 'CCC', 'CCC-', And 'CC' Ratings (http://www.standardandpoors.com/fgr_article/en/us?object_id=7554329&rev_id=2), Oct. 1, 2012

Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column. Alternatively, call one of the following Standard & Poor's numbers: Client Support Europe (44) 20-7176-7176; London Press Office (44) 20-7176-3605; Paris (33) 1-4420-6708; Frankfurt (49) 69-33-999-225; Stockholm (46) 8-440-5914; or Moscow 7 (495) 783-4009.

[Delenda Carthago]

Fuck yeah! Now I can start investing in oil & minerals.

[Futility Personified]

So does this mean the "austerity" cutbacks are going to be less severe then? Also, what is the likelihood that Greece are still going to default on everything later on down the line? It's shitty to speculate that people's conditions deteriorate further, but if this is an attempt to defuse the potentially revolutionary vibe in Greece and might keep the EU going for longer, it doesn't seem a good thing.

[Prof. Oblivion]

So does this mean the "austerity" cutbacks are going to be less severe then? Also, what is the likelihood that Greece are still going to default on everything later on down the line? It's shitty to speculate that people's conditions deteriorate further, but if this is an attempt to defuse the potentially revolutionary vibe in Greece and might keep the EU going for longer, it doesn't seem a good thing.

S&P rates sovereigns on their ability to pay their debt. In other words, as a Greek bondholder, you are concerned with how safe that investment is, which means how much of a possibility there is for the Greek government to pay that at maturity. Now, most investors don't really care about that directly because they are trading these on the secondary market and not purchasing them for the purpose of holding to maturity. But the secondary market is built off the original premise: without paying bondholders, Greek bonds would become worthless, and nobody would want them, to hold or to trade.

So the S&P isn't really concerned with austerity. They are concerned with the ability of the Greek government to meet its debt obligations. S&P, as the article above states, bumped Greece's credit rating because of the decrease in uncertainty going forward. This is due to the funding Greece is receiving by the EU; the EU is increasingly certain it will be able to provide Greece funding going forward, and has been releasing statements of late to reflect that confidence. The confidence is based on Greece being able to meet its obligations to the EU, which include budget cuts and austerity.

As for Greece defaulting, that never was the fear. The fear has always been that Greece will leave the EU to enact monetary policy to prevent a default. This could have a domino effect on other countries and possibly cause the EU to collapse, which would have massive and profound detrimental effects across the global economy, plunging us into another massive global recession.

[ÑóẊîöʼn]

More importantly, if true, it might very well translate into a boost for those bourgeois wings arguing further integration of the EU. This in turn calls communists to think about posing a positive programme regarding the European question, such as the following: Democratic demands, a pan-Europe workers movement, a pan-Europe party-movement, a European Democrtic Republic.

Why do communists need the EU to work for such things? Shouldn't that sort of thing be happening anyway since communists are internationalists?

[Q]

Why do communists need the EU to work for such things? Shouldn't that sort of thing be happening anyway since communists are internationalists?

Thank you captain Obvious. The same question might very well be posed to the national scale: Why do so many communists argue for a national party? The answer, in both cases, is because there are some real historical political contexts around, i.e, the capitalist state or, in this case, the EU that is ever more integrating itself.

Secondly, it is on a European scale that the working class can start to build a society that ascends capitalism. While this won't be full communism yet, it can act as an inspiration for the world working class as a society to look forward to.

[ÑóẊîöʼn]

Thank you captain Obvious. The same question might very well be posed to the national scale: Why do so many communists argue for a national party? The answer, in both cases, is because there are some real historical political contexts around, i.e, the capitalist state or, in this case, the EU that is ever more integrating itself.

With regards to national versus European/international organisation, I don't see why it has to be either one or the other. The political contexts are different in each case, are they not?


Secondly, it is on a European scale that the working class can start to build a society that ascends capitalism. While this won't be full communism yet, it can act as an inspiration for the world working class as a society to look forward to.

I don't doubt the necessity of trans-national organisation, I'm just dubious as to how that necessitates the European Union.

Indeed, if the EU did not exist then pan-European networking would be all the more important in the role of providing political connections between national and sub-national working class organisations.

[Philosophos]

I don't care! I was poor for two years and now I'm an upgraded to B- poor... The system works! Not for us but what the hell :lol: :lol: :lol: