2015.10.0306:06:00UTC+00S&P Upgrades Spain's Sovereign Ratings

Standard & Poor's Ratings Services upgraded sovereign ratings of Spain citing labor market reforms and kept 'stable' outlook.

The sovereign rating was raised to 'BBB+' from 'BBB'. It was three notches above the non-investment grade.

The stable outlook reflects the assessment that the broad-based economic recovery and gradual budgetary consolidation would balance the risks from large external debt.

S&P noted that the balanced economic performance over the last few years gradually benefited public finances. The agency expects real growth to average 2.7 percent over 2015-2017, up from the prior forecast of 2.2 percent.

A shift toward consistently higher real and nominal growth would benefit Spain's debt dynamics, given that the Spanish Treasury refinances central government and regional debt at an average cost of less than 1 percent, S&P said.

Further, it assessed that external risks continue to overshadow growth model based on net exports, but Spain has a strong track of gaining international market share. Exports are forecast to represent about 34 percent of Spain's GDP by the end of 2015.

S&P also noted that the European Central Bank's highly accommodative monetary stance helps to lower external financing costs for Spain.