Greece's sovereign bond rating was upgraded one notch to Caa2 from Caa3 at Moody's Investors Service, citing the release of a EUR8.5 billion tranche under the country's adjustment program allowing the repayment of debt, improved fiscal prospects and tentative signs of a stabilizing economy. The outlook was revised to positive, which implies another upgrade is likely, from stable. The sovereign bond rating is still 8 notches below investment grade. The short-term debt rating was affirmed at not prime. "Beyond the near-term impact of allowing Greece to repay upcoming maturities, we consider the conclusion of the review to be a positive signal regarding the future path of the programme, as it required the Greek government to legislate a number of important reform measures," Moody's said in a research note. "The decision to assign a positive outlook to the Caa2 rating reflects Moody's view that the prospects for a successful conclusion of Greece's third adjustment programme have improved, which in turn raises the likelihood of further debt relief." Greece's Athex Composite Share Price Index has rallied 27.5% year to date, while the S&P 500 has gained 8.9%.
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