Houses: It is possible to recover an investment grade in 2023

Greek debt is very mature and much of it is at fixed interest rates, so even if there is some volatility in the markets in the short term, due to the Ukrainian crisis, the impact on public finances and the deficit will be limited, said representatives of the three major rating agencies, DBRS, Scope and Fitch at the Moneyreview Banking Summit.

Fitch

Referring to the banks, o Fitch Pau Labro Villa stated that the rating agency remains positive towards the industry, although he acknowledged that the risks have increased in Greece and the Eurozone.

The recent upgrade of Greek banks’ credit ratings by Fitch reflected the improvement in their asset quality, capital position and profitability, he noted, estimating that red loans would fall below 10% this year.

Greek banks have very limited exposure in Ukraine and Russia, said Pau Labro Vila, estimating that banks’ profits will improve over several years, with the help of economic growth and new lending opportunities and improved operating efficiency.

DBRS

For his part, o Andrea Costanzo of DBRS Morningstar He referred to the recent increase in bank bond yields, which he attributed to the forecasts for tightening monetary policy but also to geopolitical tensions.

Therefore, the Russian invasion of Ukraine may cause delays in the implementation of the financing plans of the Greek banks, until the market conditions normalize, he stressed.

However, he pointed out that Greek banks have time to comply with the minimum regulatory capital requirements, until January 1, 2026.

Scope Ratings

“It is not impossible to recover the investment level, but a number of things will have to happen,” he said. Marco Troiano of Scope Ratings, at the time when the house rates Greece at BB +, ie one step below the investment grade, with stable prospects. As the analyst pointed out, in order to have a further upgrade, it is necessary to increase the potential growth rate of the Greek economy. Speaking about debt, he noted that what matters is the trajectory and to convince the houses that it is under control. “A little inflation also helps,” he added, noting that it is very important to see if the ECB will continue to support Greek bonds after the end of the PEPP.