RATINGS AGENCY FITCH has upgraded Greece out of the ‘restricted default’ category after the country carried out a crucial bond swap with private creditors.

Fitch moved Greece to B- with stable outlook after the bond swap at the weekend wiped billions off its national debt.

The ratings agency said that the debt exchange has “significantly improved” Greece’s debt service profile and reduced the risk of a recurrence of repayment difficulties on the new Greek government securities.

However it also said that it considers that significant and material default risk remains very high.

Fitch also urged caution about government austerity measures, warning that the implementation is likely to “prove very challenging for any administration,” and adding:

Nevertheless, the sustainability of the public finances and ultimately Greece’s membership of the eurozone depends upon the implementation and effectiveness of structural and fiscal reforms in laying a foundation for a sustained economic recovery.

The upgrading comes on the back of meeting EU finance ministers earlier today where Greece’s second bailout worth €130 billion was officially given the stamp of approval.

Greece had finalised a crucial bond swap with private creditors at the weekend in what is considered to be the biggest debt writedown in history.  The deal saw Greece knock over €100 billion off its national debt.

Last month ratings agency Standard & Poor’s downgraded Greece, making it the first eurozone country to fall into ‘selective default’ territory.

EU ministers approve €130 billion Greek bailout >

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S&P downgrades Greece into ‘selective default’ territory >