Moody’s stated on Wednesday it viewed as “credit positive” the decision of the Eurogroup regarding the disbursement of the 10.3-billion-euro bailout tranche to Greece and the agreement on a debt resettlement in the future, but warned of the risks the implementation of the agreed program runs.
“The deal alleviates the risk of a liquidity squeeze, especially in the near term, as Greece’s amortization and interest payments from May to December this year total 7.5 billion euros,” Alpona Banerji, vice president at Moody’s Investors Service, said.
“The Eurogroup also provided a road map on debt relief, which is credit positive as it signals a growing consensus among euro area member countries and the institutions, namely the [International Monetary Fund] and the European Commission, on debt relief,” she added.
She went on to note that “although the announcement doesn’t provide specifics on the type of relief, it is clear that material relief will be considered only after the program expires in 2018 and remains contingent on the Greek governments’ ability to implement successfully the conditions associated with the program. We consider implementation risks in Greece to remain high, given the small governing majority, weak institutions, and the backdrop of political and social discontent.”