It is “quite likely” that Greece’s credit rating will be raised again in the next 12 months, one of S&P Global’s top analysts has said, although the prospect of regaining a coveted investment grade score remains some way off.
Greece, the trigger point of the euro zone debt crisis a decade ago, had its rating lifted to within two notches of investment grade on Friday despite COVID having pushed its debt-to-GDP ratio above 200%.
It follows a string of upgrades in the last few years as fears the country could quit the euro have eased and extensive support from other euro zone governments, the IMF and the European Central Bank have reduced financing pressures.
Asked about the chance of another upgrade in the next year S&P’s top European sovereign analyst Frank Gill told Reuters: “Yes, it is quite likely,” highlighting the country would also benefit substantially from the EU’s ‘Next Generation’ recovery fund.
Under the plan, Athens is set to receive grants of 19.4 billion euros by 2026 and is eligible for loans of up to 12.6 billion euros. S&P thinks the money could boost Greek growth by between 8-18% vs 2020 levels over the period.
Asked whether a rise to investment grade could be on cards, Gill said there was still some way to go.
The Greek economy is still 30% smaller than it was before the global financial crisis in 2007 and investment also remains considerably lower. It is the only EU country that has a non-investment grade or ‘junk’ rating as it is better known.
“That (getting to investment grade) is going to take some time,” Gill added. “They are still two notches below and it will require more progress on putting the debt-to-GDP on a downward path,” hopefully via strong economic growth.