Global rating agency Standard & Poor’s upgraded its outlook for Spain’s debt today, highlighting the prospects for export-led growth in the Eurozone’s fourth-largest economy.

The New York-based agency kept Spain’s long-term credit rating at “BBB minus”, just a notch above junk bond status, but raised the outlook to “stable” from “negative”.

Though only a minimal upgrade, the rating action reflected a dramatic change in fortunes in Spain from mid-2012 when it seemed to be tottering on the brink of an all-out sovereign debt bailout.

The decision means Spain can shake off the immediate threat of its long-term debt being downgraded to speculative status, the equivalent of a “junk bond”.

“Today’s rating action reflects our view that Spain’s external position is improving as economic growth gradually resumes,” Standard & Poor’s said in a statement.

Spain confirmed this week that it had emerged from a two-year recession in the third quarter of 2013, posting feeble 0.1 per cent growth.

The Treasury has enjoyed a sharp drop in borrowing costs, too, as investors return in search of high returns.

Despite its emergence from recession, Spain’s economy faces significant challenges including a 26-per cent unemployment rate.

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