DBRS Ratings Limited (DBRS) announced late on Friday it has upgraded Greece’s main credit ratings from CCC (high) to B and maintained the Positive outlook. DBRS also upgraded the country’s Short-Term Foreign and Local Currency – Issuer Ratings from R-5 to R-4 and maintained the Stable trend.
DBRS stated that the upgrade is driven by the strong reform progress made by Greece since 2010 when it signed its first memorandum of understanding (MoU) with official institutions; good signs of economic recovery in 2017 and three consecutive years of fiscal over-performance.
Moreover, it noted that policy risks from a shift in political power are now lower. Since the previous DBRS rating review last November, the third review of the third bailout program was concluded and the fourth and final review is now underway, which DBRS qualified as “additional encouraging signs”. “Improvements in the ‘Fiscal Management’ and ‘Political Environment’ building blocks of our methodology underpin the upgrade,” it said.
The Canada-based agency added that the Positive trend reflects expectations in coming months of potentially credit-positive outcomes with respect to an exit from the third program and negotiations over debt relief. “DBRS also will consider the frequency and depth of post-program monitoring to ensure adequate frameworks for policy continuity,” it noted.