ECB tool can lead to upgrades

ECB tool can lead to upgrades

The European Central Bank’s proper planning and the implementation of an anti-fragmentation instrument should bolster Greece’s rating, Scope Ratings tells Kathimerini.

The rating agency also points out that the reinforcement of Eurosystem support to Greek bonds, after the Covid-19 crisis, is a condition for any favorable future evaluations of the country. This is extremely important, given that the government has set a target of achieving investment grade by 2023, at a time when PEPP’s flexible reinvestments – which were activated on July 1 and are estimated at 17 billion euros per month – are not considered sufficient by analysts to avoid fragmentation in the eurozone.

Scope Ratings rates Greece one notch below investment grade, at the same level as the assessment given by S&P and DBRS Morningstar, and although it is not among the four houses that the ECB “listens to,” it nevertheless aims to join this group soon. Fitch and Moody’s rate Greece two and three notches away from investment grade respectively, with Fitch’s next scheduled verdict due Friday.

The ECB has until July 21 to present the new tool to the market to prevent episodes of “panic” as it begins rate hikes at a time when inflation is hitting back-to-back records.

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