Greece’s credit rating upgrades to BB by DBRS Morningstar
On Friday, the rating agency DBRS Ratings GmbH (DBRS Morningstar) upgraded the ratings of Greece’s long-term foreign and local currency issuers from BB (low) to BB.
At the same time, DBRS Morningstar has confirmed the ratings of Greece’s short-term foreign and local currency issuers at R-4. The trend of all ratings changed from stable to positive.
The rating agency forecast a strong recovery in the Greek economy this year and cited significant progress in reducing NPLs held by banks, to 21.3% in June 2021 from 40.6% in December 2019 .
The positive trend reflects the rating agency’s belief that the future outlook for the Greek economy is much stronger.
The higher credit rating, according to DBRS, reflects the positive outlook on fiscal and economic developments before the pandemic, which had placed the country in a position to face persistent challenges with greater resilience, such as fiscal outperformance. sustained and significant pre-pandemic cash reserves, which increased to € 32.2 billion at the end of 2021 and gave the government sufficient fiscal leeway to mitigate the impact of the pandemic through supportive measures .
DBRS said the 8.2% contraction in real GDP in 2020 was lower than initially forecast, despite the country’s heavy reliance on tourism, and paved the way for a strong recovery in 2021, the main drivers. upgrading being improved fiscal and policy management, restructuring and economic performance, and monetary policy and fiscal stability.
The rating agency noted the 6.9% growth rate of GDP in the first six months of 2021 compared to the same period in 2020, as well as figures showing a strong tourism performance in the third quarter. , with international flights in August at 93% of 2019 levels.
He also underlined the significant sums that Greece should receive from Next Generation EU funds and from the multiannual financial framework, amounting to 70 billion euros, and from the national recovery and resilience plan “Greece 2.0” with reforms that stimulate equitable growth and investment. , reducing the investment gap of Greece compared to other countries in the euro area.
After the 2019 elections, the Greek government made significant progress in unlocking major investments, reducing bureaucracy and improving the business environment, although there is still work to be done, has declared DBRS.
Regarding Greece’s public debt, DBRS said it remains at very high levels although there are several mitigating factors in place, as Greece enjoys a favorable debt structure as the official sector owns around 80% of public debt, most of which is financed at a very low rate. interest rate.
In addition, the debt has a very long weighted average maturity of 20 years as of December 2020 with over 90% fixed rate debt, mitigating the risks associated with increased market volatility.
Commenting on the upgrade, Finance Minister Christos Staikouras said it bolsters the country’s credibility and prestige.
“Reaching the investment grade in 2023 is one of the objectives of the economic team, which has become realistic,” he noted.
“Today, DBRS Morningstar upgraded our country’s credit rating, emphasizing that the Greek economy portends strong signs of recovery and a drastic improvement in its outlook.
“This is one more positive development which stems from – and at the same time confirms and rewards – correct political measures in the economic field and, in general, the effectiveness of government policy. Our effort for a fairer, more productive and competitive economy and a more just and inclusive society is continuous. “
Staikouras pointed out that the DBRS upgrade came just a week after an upgrade by Scope Ratings and was the fourth upgrade by an international credit rating agency in the midst of the pandemic, as well as the seventh since coming to power of New Democracy.
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