Questions raised by Moody’s stance

 Agency chose not to revise Greece’s credit rating, retaining the country’s ‘selective default’ status

By Sotiris Nikas

Moody’s rating agency may not have changed its rating for Greece on Friday, but the markets did not appear inclined to wait for its announcement to display their own confidence in the country’s economy.

Ahead of the new bond issue expected in the coming week, the market kept the 10-year Greek bond’s benchmark rate at levels not seen in the four years since the country asked for an international bailout. Analysts are interpreting this as a vote of confidence in Greece’s achievements to date.

There are, however, certain questions that have arisen from Moody’s stance: The last time it revised its Greek rating was on March 2, 2012. That was when the debt restructuring (PSI) took place, after which Moody’s changed its credit rating for the Greek economy to C, which corresponds to a selective default. Such a move was seen as normal at the time due to the PSI, with the other major agencies, Standard & Poor’s and Fitch, also doing the same.

However, after the PSI’s successful completion, S&P and Fitch upgraded Greece. In contrast, more than two years on, Moody’s has not changed its rating, even though it was just two days ago that it issued a favorable report on the course of the country’s economy. It then mentioned that the vote on the multi-bill was a positive development, to the effect that it safeguards the continuation of structural reforms and supports Greece’s long-term economic growth.

Moody’s also stated that the disbursement of the bailout installments improves the government’s liquidity before the expiry of state bonds within next month. The only danger the agency cited was the...