BUSINESS

PDMA expects Greek credit rating upgrade

By Sotiris Nikas

Greece is set for a credit rating upgrade and will be able to return to the international capital markets during the course of this year, the head of the Public Debt Management Association (PDMA), Stelios Papadopoulos, stated on Thursday.

In a document that Papadopoulos forwarded to Parliament regarding the payment of fees to international rating agencies, he noted that “after the PSI, the assessment of our country has been positive and is forecast to improve, reflecting the streamlining of the fiscal figures.” He went on to suggest that a rating upgrade would make “our return to the markets in 2014 feasible.”

Standard & Poor’s (S&P) is due to issue its new Greece rating on March 21. The last time it rated the country was on December 18, 2012, when it upgraded Greece from “selective default” to B-. Then, on April 4, Moody’s is set to issue its own revised rating, after upgrading Greece from Ca to C on March 2, 2012. Since then it has not changed its rating. The last major agency to issue a new Greek rating will be Fitch, on May 23, after upgrading Greece from CCC to B- on May 14, 2013.

The fees Greece paid to the three credit rating agencies and to Japan’s R&I totaled 237,900 euros last year, which is 64.1 percent lower than in 2009, when Greece had paid fees of 661,900 euros in total. Between 2009 and 2013, Greece paid a total of 1.82 million euros to the rating agencies, according to Papadopoulos.

“As a member of the developed world, a member of the eurozone and part of this competitive credit environment, Greece could not possibly operate in the global markets without operating according to international standards; it therefore has to be rated by the international agencies, given also the debt issues it has conducted,” Papadopoulos explained in the document. However, due to the “consolidation of the fiscal streamlining, adjustment and discipline, the Finance Ministry has made significant reductions in this expenditure,” he said, noting that this reduction ranged between 48 percent and 82 percent compared with 2010.

At the same time markets are showing confidence in Greek bonds, as the spread between the benchmark yield of the Greek 10-year bond and that of the equivalent German bund dropped below 500 basis points yesterday, to 491 bps, hitting levels unseen since April 2010.

Against a backdrop of anticipation for Athens to issue new bonds, Greek 10-year bonds rose for a third straight day yesterday, pushing yields down 19 bps to 6.61 percent. This is the lowest level recorded since February 5, 2010.

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