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Fitch upgrades Greece’s issue rating by one notch (2)

(Adds details.) Io Chokona / Athens, Aug 19 () – International ratings company Fitch has upgraded Greece's credit rate by one notch, right after the declaration of first privatization project turning over 14 major airports to a Germen Company, following...

Fitch upgrades Greece’s issue rating by one notch (2)

(Adds details.) Io Chokona / Athens, Aug 19 () – International ratings company Fitch has upgraded Greece's credit rate by one notch, right after the declaration of first privatization project turning over 14 major airports to a Germen Company, following...

19 Ağustos 2015 Çarşamba 11:12
Fitch upgrades Greece’s issue rating by one notch (2)
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(Adds details.)

Io Chokona / Athens, Aug 19 () – International ratings company Fitch has upgraded Greece's credit rate by one notch, right after the declaration of first privatization project turning over 14 major airports to a Germen Company, following the new credit agreement having been reached with the tripartite committee of Troika consisting of European Union, International Monetary Fund and European Central Bank on August 14,.

The statement released by Fitch announced that the company has upgraded the credit rate by one notch to "CCC" from "CC" and pointed to the approval of both Greece and creditors to reach and affirmed the new credit agreement of 86 billion euro as the decision’s reason. Within the decision, the short-term foreign currency IDR has been affirmed at "C" and accordingly, the country ceiling has been raised by one notch to "B-" from "CCC".

“The breakdown in relations between Greece and its creditors in January-July culminated in the explicit threat of a Greek exit from the eurozone being made by key creditor countries. It is reasonable to assume that if such a situation was reached again, the risk of "Grexit" would be high” has urged, on the other hand, Fitch’s statement.

“Third official bailout programme has reduced the risk of Greece defaulting on its private sector debt obligations. The programme is intended to facilitate an eventual return to market funding. However, the risks to the programme's success remain high. Meanwhile, the political situation in Greece remains unpredictable” said the statement, urging that a snap election in Greece could raise uncertainty over the future direction of relations with the creditors.

With the first privatization effort of Greece, marking the first of the left-wing government’s term, the right to operate 14 busy airports including the holiday islands of Mykonos, Santorini, Kos, thessaloniki, Rhodes and Lesbos has been turned over to the German airport operator Fraport AG for 40 years.

With this controversial move, Greek Prime Minister Alexis Tsipras was considered to have reneged on his pre-election promises not to privatise the country's infrastructure. The turnover marked the biggest privatization in the last five years in Greece.

Following the announcement, voice of Left Platform the daily Iskra has referred to the privatization as “obedience of the Syriza government” slamming “The most valuable estates of the country has been put up, for a ridicoulous price. Syriza government has started to liquidate the state estates. In brief, the government has obeyed to the demands without dispute, one day before the third memorandum package’s approval”.

Fraport Company will pay 1.23 billion euros for the right to operate in advance and 22.9 million euro every year. This first privatization effort has also been included in the memorandum that has passed into law on August 14.

Thus, the consequential agreement is expected to be signed in the near future, following the ongoing talks about details of privatization efforts with Fraport and its Greek partner Copelouzos Company.

The project has not been affirmed by the Syriza government with a good grace, in fact, since creditors have required the privatizations for the third official credit package of 86 billion euros.

The statement also raised rating sensitivities that could result in a downgrade, including a repeat of prolonged break-down between Greece and creditors particularly in relation to ESM programme’s implementation, and addressed sensitivities that could result an upgrade, including a track record of successful implementation of the ESM programme, supported by a relatively stable political environment and an economic recovery with further primary surpluses in Greece.

 

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