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Greece’s Credit Rating Upgraded
Greece’s credit rating has been lifted to investment-grade status for the first time since the debt crisis that erupted more than a decade ago and resulted in three international bailouts.
DBRS Morningstar’s Assessment
- DBRS Morningstar lifted its assessment of Athens’ creditworthiness on Friday to triple B.
- This is the beginning of a series of upgrades from “junk” territory.
- The agency expects Greece’s primary fiscal balance to reach a surplus of 1.1% this year and 2.1% in 2024.
Recognition by the European Central Bank
Although DBRS is not one of the “big three” agencies, its ratings are recognized by the European Central Bank, giving its opinions outsize clout within the euro area.
Rehabilitation in the Eyes of Investors
The return to investment-grade status is the latest sign of Athens’ rehabilitation in the eyes of investors, after being pushed to the brink of bankruptcy and exit from the eurozone.
Positive Response from Greece
“Greece’s upgrade to investment grade is like a seal of approval, firmly putting the crisis years behind us,” said Alex Patelis, chief economic adviser to prime minister Kyriakos Mitsotakis.
Recovery from Natural Disasters
The upgrade brings welcome news for Greece, which has been hit by devastating wildfires and extreme flooding in recent weeks.
Improved Creditworthiness and Co-operation with the EU
DBRS said improved creditworthiness also “reflects a strengthening in co-operation with the European Union and the euro system institutions”, coming from past fiscal consolidation and reforms.
Benefits of the Upgrade
- Greek debt becomes eligible for the ECB’s asset purchase programs and for reinvestment of matured bonds on the central bank’s balance sheet.
- Easier access to wholesale funding for Greek banks.
Full Access to ECB Liquidity
“With the upgrade, the country gains full access to ECB liquidity,” said Dimitris Malliaropulos, chief economist of the Greek central bank.
Potential Inclusion in Investment-Grade Indices
The upgrade brings Greek bonds one step closer to being included in investment-grade indices, opening up Greek government debt to a broader pool of investors.
Speculation on Other Rating Agencies
DBRS’s move “supports the already existing speculation that this is a path the other rating agencies will follow”, said Richard McGuire, head of rates strategy at Rabobank.