Clear message from S&P: Greece remains
Sunday 24 April 2022, 00:00
The huge improvement that Greece is showing in the management of its finances is the main reason why the largest rating agency in the world proceeded with an upgrade that sends a strong message to the markets and makes the recovery of the investment level a matter of months. The Greek debt is now in the “BB +” level by 3 rating companies (S&P, DBRS, Scope) and the Greek economy is becoming an example to be imitated throughout Europe for the big return.
It is the only one that sees so many upgrades, even in difficult times and in conditions unprecedented with pandemics and war, energy crisis and extremely high inflation. Despite having the highest debt in Europe (as a percentage of GDP) and the second highest in the world after Japan, S&P points out that in terms of maturity and average cost of service, Greece has one of the most interesting features in the world. .
In economic terms, Greece is gaining ground with its performance in rating agencies, a development that significantly facilitates the flow of investment funds in the coming years. Liberal had since January 17 mentioned the significant possibility of upgrading the Greek economy by S&P, which was the first in BB + of the 4 “big”.
But the DBRS which on March 20th proceeded first to upgrade the Greek debt to BB +. Then we wrote that the time of the investment stage for Greece is approaching. So if DBRS energy has brought us closer to the coveted recovery of the investment tier, S&P’s move is the ultimate catalyst. On the one hand, it pressures the other houses to follow and at the same time gives Greece essentially only one choice: to continue on the path of prudent fiscal policy and reforms.
S&P’s message could not be clearer: “We will upgrade Greece’s rating if structural reforms continue in line with stronger-than-expected economic and fiscal performance.”
The report of the report that accompanies the upgrade decision is also clear: “Greece is being upgraded to BB + due to the improved management of the economic policy title”. At a time when all international companies, without exception, are downgrading growth forecasts and upgrading inflation forecasts, at a time when Europe is threatened even with a recession, the Greek economy is climbing stairs.
S&P forecasts growth of 3.4% for 2022, while for inflation it estimates that especially in our country it will start to de-escalate from September. At the same time, it emphasizes the great progress of Greek banks in reducing red loans, the great support provided by the ECB to Greek bonds and the commitment of the government to continue with the same economic policy in the coming years, proceeding with reforms and fiscal adjustment, which implies that debt will remain on a downward trajectory.
S&P will rate Greece again on October 21, but with the stable outlook that accompanies the rating and the extreme uncertainty that prevails in the world, it will hardly give the investment grade this year. However, Fitch, which rates Greece with BB one step lower than S&P and DBRS, gave a positive outlook in January and may raise us to BB + either on July 8 or October 7.
Finally, it remains to be seen what Moody’s will do in September, which while it seems the most “strict” and on March 20 ignored the rating of Greece, has in the recent past proceeded to two double upgrades. In any case, it is very likely that the year will end with all the houses having upgraded us to BB +.
The calendar of evaluations for this year:
Fitch: July 8 – October 7
Moody’s: September 16
DBRS: September 16
S&P: October 21