S&P Lifts Rating on Greece

A strong and clear commitment from members of the euro zone to keep Greece in the common-currency bloc helped lead Standard & Poor's to raise its rating on Greece to B-minus from selective default Tuesday.

It is the highest rating S&P has given Greece since June 2011 as the country continues to face a deep recession and debt crisis.

Even with the country still facing challenges, S&P placed a stable outlook on the new B-minus rating. That buoys hope that the worst of Greece's problems could be in the past.

Greece was downgraded to selective default from triple-C Dec. 5 when the country commenced its second debt restructuring of the year. S&P was in selective default in late February when it underwent a first debt restructuring program as well. Between those two restructurings, Greece's debt rating was in the C-level, multiple notches below its new rating.The outlook "balances our view of euro-zone member states' determination to support Greece's euro-zone membership and the Greek government's commitment to a fiscal and structural adjustment against the economic and political challenges of doing so," S&P said in a statement.

The selective default rating was only temporary and is a typical rating from S&P when a country goes through a debt restructuring.

Greece received a long-awaited €34.3 billion ($45.4 billion) round of aid Monday as part of the latest bailout program. The aid comes after Greece agreed to buy back some of its outstanding private-sector debt at deep discounts to face value to reduce its debt burden.

S&P noted that even after the debt repurchase, Greece's debt-to-gross domestic product ratio is more than 160%. Despite the onerous debt level—one of the highest ratios in the world—S&P said it was encouraging that euro-zone members would improve official bailout lending terms to the government as part of the latest deal.

The rating could be slashed in the future if there is a likelihood of another distressed debt exchange, S&P said. An upgrade could eventually be possible for Greece if it fully follows through on complying with bailout requirements and policy making helps contribute to a sustained economic recovery, the ratings firm said.

S&P's rating is higher than where competitors Fitch Ratings and Moody'sMCO +1.71% Investors Service rate the country. Fitch has a triple-C rating and Moody's a single-C rating on Greece.