Road to investment grade has now opened
Sunday’s election result paves the way for Greece’s recovery of investment grade and for the continuation of the country’s significant economic performance, which is superior to the whole of the eurozone, according to rating agencies.
They say the clear political horizon is a credit positive event for Greece, which has essentially started counting down for its return to investment grade, that will have multiple positive effects on the economy and the market.
New Democracy’s strong majority “practically guarantees policy continuity, including efforts to increase private and public investment, which we believe will boost the growth of Greece, which is expected to outperform the eurozone in the medium term,” Federico Barriga, Fitch’s chief analyst for Greece, tells Kathimerini.
The result “will bring another period of political stability to Greece and ensure policy continuity, allowing the new government to implement structural reforms and investment,” comments Nichola James, DBRS co-head of state assessments. “However, the new government will still have to deal with issues of the past related to high public sector debt, even higher bad loans and high unemployment. We believe that sustained structural reforms and growth-enhancing investments, within a framework of fiscal discipline, could continue to help improve Greece’s credit rating.”
The second election eliminated the risks of political deadlock in the country, notes S&P analyst Samuel Tilleray: “The new government will be able to continue its pro-growth reforms, including reducing the processing time of cases in the courts and modernizing the regulatory framework for state enterprises, among others. The reforms aim to improve Greece’s attractiveness for investment. Reforms and fiscal data will be key elements for our next rating decision on Greece on October 20.”
ND’s victory is a credit positive as it ensures continuity in fiscal and economic policies, Steffen Dyck, Moody’s chief analyst for Greece, points out to Kathimerini: “The continued focus on improving the business environment and the health of the banking sector, combined with the implementation of milestones and reforms under Greece’s Recovery Plan, will support economic growth,” he emphasizes.
