International rating agencies are sending clear messages to the European Central Bank about the risk to Greece’s cost of borrowing unless Frankfurt continues to purchase Greek bonds after the completion of the extraordinary program of quantitative easing (PEPP).
Moody’s warns in a report that leaving Greece without the ECB support would generate instability in the country’s borrowing costs (i.e. send bond yields higher) and in the cost of servicing its debt.
Recent statements by various ECB officials have lowered expectations in Athens about the country’s participation in Frankfurt’s regular QE program after PEPP ends in March 2022. It is no coincidence that both Standard & Poor’s and Moody’s chose to remain quiet on the scheduled dates for the assessment of the Greek economy, while the market had anticipated a credit rating upgrade. To a great extent this is due to the pending final verdict by the ECB.
Nevertheless the unclear situation with the pandemic, due to the new strain from Africa, is making the ECB decision harder, and analysts now expect that Greece’s issue might not be examined next month and will be postponed till January.