Standard & Poor's raised Greece's credit rating out of default territory on Wednesday, as expected after Athens slashed its debt by about a third by completing the biggest sovereign debt restructuring in financial history.
But the firm kept Greece firmly in the junk category with a CCC rating and warned that a deep recession, unpredictable elections on May 6 and popular anger against austerity could threaten Athens' efforts to put its finances back on track.
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"While the exchange has, in our view, alleviated near-term funding pressures, Greece's sovereign debt burden remains high," S&P said in a statement, adding that it expected the debt to stay as high as 160-170 percent of GDP in the next three years.
S&P assigned Greece's rating a stable outlook, indicating it was not planning to change the rating again soon, but it warned that risks remained.
"The ratings could be lowered if we believe that there is a likelihood of a distressed exchange on Greece's remaining stock of commercial debt," it said.
The three major rating firms have repeatedly slashed Greece's rating throughout the debt crisis, cutting it to default over the debt deal in which private bondholders lost most of their investments in the country's government bonds.
S&P had flagged as early as February that it was likely to raise Greece's rating to the CCC category after the debt swap was completed.
Fitch assigned Greece a slightly higher B-rating in mid-March, becoming the first major rating agency to upgrade Athens' rating after the swap cut its debt by about 100 billion euros ($131.67 billion).
Moody's is the only one of the three major rating agencies to have kept its Greek rating unchanged at the lowest level. It has said it would revise the rating "in due course" and that any upgrade would likely be small.