Although 2023 is a year with several problems and geopolitical risks, it could not be characterized as negative for the Greek economy. One of the factors that played a decisive role was the recovery of investment grade after 13 years.
Fitch is expected in a few hours to ‘close’ the series of upgrades of the Greek economy. Interest is mainly focused on whether it will eventually proceed with an upgrade of the Greek bond, for the second time in a year.
This specific assessment is considered critical as it will determine the time for Greek bonds to be included in the main international indices. If Fitch were to upgrade Greece’s rating today, Greek bonds could be included in international indices as of January 2024.
Apart from the fact that Greek bonds will enter the “list” of international investment funds, a further drop in Greek bond yields is expected. On Thursday, the yield on the 10-year bond was at 3.69%, when a month ago they were at 4.16%.
The timeline of upgrades
The cycle of upgrades opened in the summer and more specifically on July 20 with the Japanese R&I upgrading Greece and including it in the investment tier. Of course, the specific rating agency is not recognized by the European Central Bank (ECB).
The German rating agency Scope Ratings included the Greek bond in the investment grade in early August despite the fact that at that time it was not recognized by the ECB. However, on November 10, the Governing Council of the ECB decided to accept the agency as a new external credit rating agency.
At the beginning of September, DBRS upgraded the Greek economy to investment grade. In a “surprise” move a week later, Moody’s proceeded with the double upgrade of Greece, ranking it just one notch below investment grade.
However, October was perhaps one of the most important months for the Greek economy as one of the so-called “major rating agencies”, Standard & Poor’s, “endorsed” the investment grade, by upgrading the Greek debt to the BBB grade – with a stable outlook.
Today, it is Fitch’s day. On January 27, the specific rating agency upgraded the credit rating of Greece to “BB+” from “BB”, bringing it one grade below the investment grade. On June 9, Fitch maintained a wait-and-see attitude in its interim report as it awaited the outcome of the June 25 election.
