Ratings agency Fitch upgraded its credit rating for Greece by one notch on Tuesday, Aug 18, saying the latest bailout deal the country struck with its foreign lenders reduced the chance of default , Reuters reports.

Greece and its European and IMF lenders reached an 85 billion euro ($94 billion) bailout agreement last week after nailing down the terms of new loans needed to save the country from financial ruin.

The deal gives Greece some respite after a year marked by acrimonious talks with lenders, the imposition of capital controls and a three-week shutdown of its banks before Athens agreed to demands for more austerity in exchange for aid.

In a statement raising Greece's long-term credit to 'CCC' from 'CC', Fitch said the Aug 14 deal "reduced the risk of Greece defaulting on its private sector debt obligations" but added that risks to the program's success "remain high".

"It will take some time for trust to be restored between Greece and its creditors, which increases the risk of delayed program reviews," Fitch said. "Meanwhile, the political situation in Greece remains unpredictable."

Speculation has been mounting that the government may call a confidence vote following a rebellion among lawmakers from the ruling Syriza party over the new bailout deal.

The political turmoil has also raised uncertainty over how the government will implement the difficult economic reforms without a workable majority.

In June, Fitch cut its long-term rating on Greece to 'CC' from 'CCC' amid turmoil over the debt negotiations and fears it could crash out of the eurozone.