First investment grade decision
Japan gave an important vote of confidence to Athens, as its rating agency Rating and Investment Information (R&I) is now the first to attribute Greece investment grade, after the upgrade to BBB- with stable prospects (from BB+ with stable prospects previously) on Monday.
Although the Japanese agency is not ranked among the houses that the European Central Bank takes into account in its decisions, its move is considered a harbinger of similar moves by the “big” agencies – i.e. Fitch, DBRS Morningstar, Moody’s and S&P – which will mean lower financing costs, greater investment in the country, growth and jobs. A similar move is considered possible by Scope Ratings this Friday.
According to the Ministry of National Economy and Finance, this development opens the way for investment funds from Japan and the Asian market as a whole, to the Greek economy.
R&I points out that the result of the elections and their positive impact on the prospects of the Greek economy, combined with the improvement noted by the banking sector, supported the upgrade of the country to the investment grade.
The agency points out that the second term of Prime Minister Kyriakos Mitsotakis ensures the continuation of the policies aimed at the revitalization of the Greek economy and fiscal consolidation and increases expectations for strengthening growth driven by investments and reforms, as well as for continuous improving the public debt ratio. While higher energy prices and accelerating inflation have weighed on the economy since early 2022, a recovery in tourism demand has supported the economy, with growth at 5.9% last year, above the eurozone average, while according to the forecasts of the government and the European Commission, growth in 2023 will amount to 2.3% and 2.4% respectively.
Also, thanks to the progress made in disposing of nonperforming exposures using securitization, the NPEs ratio of Greek banks has fallen to single-digit levels. With improved balance sheets, banks are transforming into a profit-generating structure while also strengthening their capital, R&I points out.
