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S&P: Upgrading Greece to BB + with stable prospects

LAST UPDATE: 23.39

The American rating agency Standard & Poor’s upgraded Greece’s credit rating from grade BB to BB +, with a stable outlook, bringing the country just one step from the investment grade.

The war in Ukraine is the main reason for the house’s forecast that Greek GDP growth will slow to 3.4% in 2022, from 8.3% last year, despite the low direct exposure to exports to Russia, the significant levels of savings of and diversification of gas import sources through suppliers from Azerbaijan, Algeria, Egypt and Nigeria.

Inflation hit a 27-year high of 8% in March, but S&P estimates that there is no evidence of rising wage pressure so far, which means that year-on-year inflation is likely to slow until September, when very high monthly figures from the third quarter of 2021 will begin to normalize the index.

Despite the more turbulent external environment, the government, committed to 2022-2026 under the National Plan for Recovery and Sustainability, will need to make further progress in implementing structural reforms and fiscal consolidation, consolidating the downward trend in the debt ratio to GDP, the house notes.

Non-performing loans have fallen below 13% of the total loan stock in 2021, as banks have securitized and sold these exposures. At the same time, the lending capacity of banks is improving, giving momentum to the impact of monetary policy.

Therefore, S&P upgrades Greece’s long-term credit rating to “BB +” from “BB” and confirms the short-term rating to “B”.

The outlook is stable, reflecting the balanced risks to economic growth and public finances from the conflict in Ukraine in the face of substantial EU support and domestic reform momentum, the US House said.

The market considered it possible for S&P to upgrade Greece one step away from the investment level and at the same levels as the DBRS rating. In a recent report, DZ Bank had noted that the goal set by the Greek government to achieve the investment grade by 2023 is absolutely realistic, considering the upgrade today by S&P certain.

As he stressed, the country has already taken many steps to return to normalcy. Despite the current scenario of uncertainty, with the spike in inflation and the war in Ukraine, Greece announced a new milestone in its fiscal consolidation by fully repaying its debt to the IMF earlier, while it is already beginning to repay the bilateral loans of the first memorandum. summer will come out of the regime of enhanced supervision.

Citi also noted that the S&P upgrade was possible, if not today, then at the next assessment on October 21, due to the recent improvements in the macroeconomic outlook of Greece, with the IMF loans now fully repaid, the political scene being stable and signs of strong recovery in tourism revenue this year.

The next ratings for our country are Fitch on July 8, the double verdict from Moody’s and DBRS on September 16, the third rating of Fitch on October 7 and the last for the year of S&P, as mentioned above, on October 21.

Source: Capital

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