Excluding Greek bonds from ECB QE would be bad for Greek rating, agencies say

Excluding Greek bonds from any European Central Bank quantitative easing program would be bad news for the country's recently upgraded credit rating, the main ratings agencies said.

The ECB is widely expected to announce a large-scale government bond buying program on Thursday. Its Executive Board has proposed buying 50 billion euros ($58 billion) per month from March, a euro zone source said.

But with doubts about whether Greece will stick to its EU, ECB and IMF-prescribed austerity policies after a cliff-hanger election on Sunday, some at the central bank would prefer not to include Greek bonds.

Estonian ECB member Ardo Hansson spelled out the concerns earlier this month, highlighting the promises being made by Greece's anti-bailout Syriza party, now ahead in Greek polls. "When there's a chance that somebody will come and say 'I'm going to restructure our debt', committing to buy such bonds is near the borderline of what could be considered," he said.

For the top rating agencies, Standard and Poor's, Moody's, Fitch and DBRS, all of which upgraded Greece last year, any exclusion from ECB buying would pose a difficult question about what such a politically symbolic decision would mean.

With Athens firmly locked out of bond markets and dependent on bailout funding, the practical impact may be limited, but it would certainly add to a growing feeling among investors that the euro zone might be prepared to cut Greece loose.

When asked what he thought about an exclusion from ECB bond buying, S&P's top European analyst Moritz Kraemer said he didn't want to second-guess the central bank's plans.

But he said that although QE was not a cast iron guarantee against default, it was likely to keep borrowing costs down. If it...