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Fitch sees political risks

Greece's forays into global bond markets will help increase its financing flexibility but the debt-laden country is not out of the woods yet, a senior director at rating agency Fitch told Reuters on Thursday.

Greece returned to markets in April after a four-year exile. It sold another bond on Thursday, raising 1.5 billion euros.

Douglas Renwick, Fitch's senior director for western Europe, said Greece's renewed ability to borrow could help the country bridge future funding gaps but warned of risks including the possibility of snap elections in 2015 that could hamper reforms, Reuters Renee Maltezou notes.

"The risk of early elections I think is reasonable," Renwick said. "To promote growth in the long term, structural reforms are very important."

"If it's limited extra financing, it's positive and rather increases the financing flexibility of the government," Renwick said on the sidelines of a conference in Athens.

"What we would caution is that just because market access looks more likely, it doesn't necessarily change the inherent risks in Greece." Fitch upgraded its sovereign credit rating for Greece in May, from B- to B.

It still classes Greek bonds as "highly speculative" and the current rating is five notches below investment-grade.

Fitch forecasts Greece returning to economic growth this year after a six-year recession that has shrunk its economy by a quarter. It expects the economy to grow 0.5 percent in 2014, rising to 2.5 percent in 2015, Renwick said.

But any future revision of the rating depends not only on Greece's economic outlook, but also on any debt relief that might be agreed later this year or next year, he said.

"It would make the Greek debt burden more manageable but it's also good because it continues to send the signal that the troika, or the EU in particular, is still supporting Greece and will continue to support Greece over the long term, and that really underpins the rating," Renwick said.