Greece continues to have “buffers” in place to protect it from rising borrowing costs and there is a reasonable chance that its credit rating could be upgraded soon, one of S&P Global’s top analysts told Reuters on Monday.
The company’s top European sovereign analyst Frank Gill said Greece, which has a strong cash position and has also lengthened its debt maturity profile in recent years, has “substantial buffers” in place as sovereign borrowing costs rise.
It is still the European country with the highest debt burden relative to the size of its economy.
Greece’s 10-year bond yield jumped more than 25 basis points on Monday to 2.37%, its highest since April 2020, before easing yesterday to 2.31%.
Its debt has sold off particularly sharply as its speculative grade rating means Greek bonds are only eligible for the ECB’s pandemic emergency bond purchases, which end in March, not the older asset purchase program.
S&P raised Greece’s rating by a notch to BB in April 2021, two notches below investment grade.
Greece has a positive outlook, meaning a further ratings move is possible with a 12-month period.
“So I think there’s certainly quite a reasonable probability of an upgrade by the end of April 2022,” said Gill. [Reuters]