S&P Global Ratings has upgraded Greece's sovereign credit rating back to investment level after 13 years. The rating agency announced late Friday that it has raised the Greek rating to "BBB-", from “BB+" with a stable outlook. 

This upgrading makes S&P the second rating agency among the four that the European Central Bank consults before accepting a country's sovereign bonds as collateral for lending to commercial banks. The upgrade was welcomed by the Greek government. Recall, DBRS Morningstar upgrade Greece's rating to investment grade BBB last month. Also, Fitch is expected to reassess Greece on December 1.

“Significant budgetary consolidation has placed Greece's fiscal trajectory onto a firmly improving track. Supported by a very rapid economic recovery, the Greek government has been able to regularly outperform its own budgetary targets despite gradually increasing social transfers,” S&P said. 

The agency said it expect the government to achieve a primary surplus of at least 1.2% of GDP this year, exceeding its 0.7% target, even considering the material budgetary cost associated with the recent wildfires and floods. 

“We forecast an average primary budget surplus of 2.3% of GDP over 2024-2026,” it added. Moreover, it anticipates growth to run 2.5% this year.

The return to investment grade was a key target for the ruling New Denocracy party, which was re-elected with a resounding victory in June.

“Proud of the recognition of what our country has achieved,” Prime Minister Kyriakos Mitsotakis posted on social media. “We are determined to continue our reform agenda, which will attract investment, create jobs and achieve inclusive growth.”

For his part, Finance Minister Costis Hatzidakis hailed the upgrade and reiterated the country’s commitment to adhere to prudent budgetary policies. “The country faces a historic window of opportunity through a combination of the right economic policy mixture with political stability,” he said in a statement.

The European Stability Mechanism also applaud the move, “Greece has achieved an important milestone in its recovery from a painful debt crisis more than a decade ago.” 

But it warned: “recovering the investment grade rating is only the first step. To strengthen and maintain such status, Greece needs to complete the country’s modernisation and keep its reform momentum as the new government’s agenda suggests.”