Ratings agency Standard and Poor's raised Greece's sovereign debt rating by six notches on Tuesday encouraged by a burst of support for Athens from eurozone partners.

The upgrade from selective default to B-/B "reflects our view of the strong determination of European Economic and Monetary Union (eurozone) member states to preserve Greek membership in the eurozone," an S&P statement said.

The outlook for Greek public debt was stable because of the government's commitment to fiscal and structural adjustments, it added.

Greek Finance Minister Yannis Stournaras said the decision "was a very important one that created a climate of optimism."

"But we know that the road is still long and hard, the hour is not one for easing up," he said.

The upgrade came after Greece completed a debt buyback program and eurozone finance ministers approved fresh loans under a second bailout.

S&P had placed Greece in selective default earlier this month, pending the result of the buyback.

"We view the eurozone member states' decision to provide material cash flow relief to Greece as indicative of their determination to restore stability to Greek finances, and to preserve Greece's eurozone membership," S&P said.

The European Union and the International Monetary Fund have provided most of the emergency relief for Greece, via two rescue packages.

S&P said: "We could raise our long-term rating on Greece if the government follows through fully on its steps to comply with the EU/IMF program, thereby restoring predictability to its policymaking as well as contributing to a sustained economic recovery and improved prospects of sustainable debt-servicing.

"We could lower the ratings if we believe that there is a likelihood of a distressed exchange on Greece's remaining stock of commercial debt," it also warned.

In Washington meanwhile, the international bank lobby IIF said Tuesday that Greece's newly revamped bailout program still faced large risks as long as the national economy continued to contract sharply.

"With real GDP (gross domestic product) likely to decline another 4-5 percent next year after falling 6 percent this year, and further austerity testing social cohesion, risks to the EU-IMF program will remain substantial," the Institute of International Finance said. (AP)