Fitch Ratings upgraded Greece on Tuesday to a "B-" rating with a stable outlook from restricted default over its bond swap that wiped some 100 billion euros ($131 billion) off its debt.
"Fitch has withdrawn the ratings on the bonds issued by the Republic and governed by Greek law and assigned 'B-' ratings to Greece's new government bonds created as a result of the private sector involvement (PSI) debt exchange," it said in a statement.
The agency said the swap has "significantly improved Greece's debt service profile and reduced the risk of a recurrence of near-term repayment difficulties on the new Greek government securities."
Greece completed on Monday the debt swap of 177.3 billion euros of bonds issued under Greek law, using collective action clauses to force holdouts to accept the exchange which left them with less than half of the face value of their investments.
Another exchange for bonds issued under international law is to take place on April 11.
The Greek bond swap was intended to avert default by Greece when a major payment had been due on March 20, and unlocked a eurozone-IMF rescue worth 130 billion euros to enable the country to rebuild its economy.
While Fitch said it still considers there to be a "significant and material default risk" due to Greece's still high level of indebtedness, it said "there is a limited margin of safety for debt service on the new securities over a 12 to 24 month horizon, reflected in the Stable Outlook."
It said that a target from the European Union and International Monetary Fund of returning Greece's debt level to 120 percent of gross domestic product in 2020 "is very sensitive to assumptions regarding the implementation of fiscal austerity and economic growth."
Fitch noted that the Greek government had already adopted a number of required actions, but said "their implementation is likely to prove very challenging for any administration".