Standard & Poor’s: Upgraded Greece to BB + with stable prospects

The American rating agency Standard & Poor's upgraded Greece's credit rating from grade BB to BB +, with a stable outlook, bringing the country just one step from the investment grade.

The upgrade reflects the house's expectation of a continuous improvement in the effectiveness of Greek policy, while the effects of the war in Ukraine seem manageable in light of significant security reserves in both the private and public sectors.

The agency estimates that higher energy prices and accelerating inflation will help slow GDP growth this year to 3.4% from 8.3% in 2021, with GDP expected to average more than 3%, in the period 2023-2025, thanks to the Recovery Fund and other transfers, and a strong expected further recovery of tourism profits.

Since 2020, governance effectiveness has been boosted through monetary and fiscal policy at the eurozone and EU levels, respectively.

The supportive monetary policy of the European Central Bank (ECB) facilitated access to the market for government borrowing at relatively low cost due to the inclusion of Greek government bonds in the Extra Market Program (PEPP) and as collateral in the repurchase operations of the ECB.

More recently, before the end of the PEPP in March 2022, the ECB clarified that it could continue to buy Greek government bonds beyond repurchases, if it records a deterioration in the transmission of monetary policy in Greece, while the economy is still recovering from the pandemic.

At the same time, the house records a significant improvement in the quality of the assets of systemic banks, as the percentage of non-performing exposures (NPEs) in total loans in the banking sector fell sharply to 12.8% in 2021, from 31% in 2020. S&P estimates it will be below 8% by the end of 2022.<...