BUSINESS

Moody’s says enhanced surveillance is credit positive

TAGS: Economy

Moody’s Investors Service said in an annual report on Thursday that Greece’s (B3 positive) credit profile is supported by the substantial debt relief granted by the country’s euro-area creditors in June, while the enhanced surveillance of the country is a credit positive development for the international ratings agency.

“The debt relief package ensures that Greece’s debt-service obligations will be very manageable over the next 10 years, supporting the government’s return to private capital market funding after a decade of reliance on official-sector financial support,” it stated.

“The debt relief package is a significant benchmark in Greece’s recovery from its deep economic, fiscal and financial crisis,” said Kathrin Muehlbronner, a Moody’s senior vice president and author of the report: “It reflects both the significant progress achieved by the Greek authorities in correcting the causes of the crisis and the strong and continuing support from Greece’s euro-area creditors.”

The fact that, as part of the debt relief, Greece will remain under the close supervision of its euro-area creditors is a credit positive in Moody’s view, as “it should ensure that the Greek authorities remain on a reform path.”

However, Moody’s warned more debt relief measures will likely be required after 2030, that “Greece needs stronger investment to sustain economic growth over the medium term,” and that its “banking sector remains a key vulnerability, despite recent improvements.”

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