DBRS: Upgraded Greece to BB (high), revised prospects to stable

LAST UPDATE: 23.20

The Canadian company DBRS Morningstar upgraded Greece’s credit rating from BB to BB (high), while revising the outlook for the Greek economy from stable to positive.

According to the Canadian house, the upgrade reflects the positive view of DBRS that Greece continues to implement the structural reform program and remains fully committed to fiscal consolidation. The economy grew at a rate of 8.3% in 2021 and is now very close to pre-pandemic levels. Fiscal overperformance and liquidity management strategy in 2021 kept cash reserves at very high levels, which today reach 41 billion euros.

DBRS estimates that the Russian invasion of Ukraine will deduct about one percentage point from GDP in 2022. In December 2021, the European Central Bank sent a signal of support for Greek government bonds. Greek systemic banks continue to make significant progress in reducing non-performing loans (NPLs), reducing them to single digits, despite some new deterioration in asset quality.

The steady trend reflects DBRS’s view that Greece’s long-term economic outlook appears to be significantly strengthened by the level of governance, investment, exports and reforms, thus supporting public sector debt sustainability.

DBRS Morningstar notes that there are still several credit uncertainties – the global economic impact of the situation in Ukraine, the quality of financial assets, and the extent to which the ECB will support Greek bonds in a situation market disruption.

Greece’s assessment is supported by its participation in the euro area. Greece is one of the six Member States of the European Union with approved national plans under the EU Recovery Fund, which include grants and loans, the Canadian house emphasizes. In addition, the country is one of five member states that submitted a first disbursement request to the European Commission, which is expected to release the first disbursement of 3.6 billion euros, most likely in April.

A total of around € 70 billion in funds is available from the EU Recovery Fund and the Union’s Multiannual Financing Framework. Greece’s National Recovery and Sustainability Plan (Greece 2.0) includes reforms that are likely to boost inclusive growth and investment, reducing the investment gap between Greece and its eurozone counterparts.

The Canadian company DBRS had rated the debt of the economy in the BB grade with positive outlook, from September 2021, two positions below the investment grade.

The next evaluation for Greece is scheduled for April 14 by Standard & Poors. S&P has ranked Greece in the BB category, with positive prospects since April 2021.