S&P's Kraemer: euro zone has much to do to cut debt, boost growth

Tue Jun 24, 2014 8:01am EDT
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By Marius Zaharia and Jemima Kelly

LONDON (Reuters) - Euro zone countries still have much work to do to cut debt and boost growth and their credit ratings are unlikely to rise until they get their economies into better shape, a senior Standard & Poor’s official said on Tuesday.

S&P's head of sovereign ratings for Europe, Middle East and Africa, Moritz Kraemer, told Reuters in an interview that he saw a "calm period ahead" for ratings actions in Europe.

"Much of the homework still needs to be done. The over-indebtedness in a very low inflation environment poses huge risks to the growth outlook for the euro zone," he said on the sidelines of a conference in London.

"There is no need to raise the ratings until the (economic) fundamentals improve."

Kraemer said the countries that had made most progress in cutting debts included Ireland and Spain, and both had seen their ratings upgraded.

S&P raised Ireland by one notch to A-minus earlier this month, citing its brighter economic outlook

Last month, the agency raised Spain by one notch to triple-B on similar grounds.

Kraemer said the return to debt markets of Cyprus, which was bailed out just a year ago, and Greece had little impact on their ratings.   Continued...

Workers maintain the huge Euro logo next to the headquarters of the European Central Bank (ECB) in Frankfurt, December 6, 2011.  REUTERS/Ralph Orlowski