Fitch upgrades Greece on third bailout

Fitch Ratings said it upgraded Greece’s long-term foreign- and local-currency issuer default ratings by one notch to CCC from CC.

The ratings on Greece’s senior unsecured foreign- and local-currency bonds also were upgraded to CCC from CC, along with its country ceiling by one notch to B- from CCC. Its short-term foreign-currency issuer default rating also was affirmed at C.

The next scheduled review date for Fitch’s sovereign rating on Greece is Nov. 13, but Fitch said it believes that developments in Greece warranted a deviation from the calendar.

The upgrades and calendar deviation reflect an Aug. 14 agreement reached between Greece and the European institutions on the framework for a third official bailout program, which reduced the risk of Greece defaulting on its private-sector debt obligations, the agency said.

An initial disbursement of about €23 billion is expected this week and will ease the acute liquidity strain of recent months, covering the repayment of €3.2 billion of bonds due Aug. 20 and bridging loan due in September, Fitch said.

The program is intended to facilitate an eventual return to market funding, the agency said, but the risks to the program’s success remain high.

It will take some time for trust to be restored between Greece and its creditors, which increases the risk of delayed program reviews, Fitch said.

Meanwhile, the political situation in Greece remains unpredictable, the agency added.

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