(Bloomberg) — Greece’s investment-grade status was restored by Scope Ratings, evidence of its progress in repairing public finances 13 years after it became the first euro-zone member to be cut to junk.
Friday’s decision helps draw a line under the debt crisis that erupted in 2010 and required three international bailout programs as Greece’s membership of the now 20-member euro zone was thrown into question.
It also follows the resounding re-election of Prime Minister Kyriakos Mitsotakis, who’s pledged sound state finances and a continuation of the economic reforms he embarked on four years ago.
“A steady trajectory of decline in public debt, on the back of high inflation, above-potential real economic growth, low average interest costs of the prevailing debt portfolio and achievement of primary fiscal surpluses” is among drivers for the upgrade, Scope said in a statement lifting Greek sovereign rating to BBB- from BB+.
It also cited “sustained European institutional support for Greece,” while added that “credit ratings remain challenged,” mainly due to high government debt.
The upgrade was widely expected by investors, who have been buying the nation’s bonds at lower yields than those of investment-grade peers like Italy, making them the euro area’s best performers this year. That’s a turnaround after many were burnt in the largest sovereign restructuring in history.
Read more: Hot New Play in Stock and Bond Markets, Greece Is Suddenly Booming
Scope’s assessments aren’t currently recognized by the European Central Bank — meaning it won’t accept Greek bonds as collateral. But that situation may change soon as the Frankfurt-based institution reviews Scope’s eligibility.
Analysts expect other ratings firms to follow Scope’s example over the coming months, with Mitsotakis targeting upgrades by year-end. Before Friday’s announcement, Japan’s Rating and Investment Information Inc. was the first credit assessor to lift Greece to investment.
DBRS Morningstar earlier on Friday highlighted that Greece is on the threshold of an investment grade rating, saying it was focused on the implementation of structural reforms, improvements in economic prospects and the country’s commitment to fiscal consolidation.
With Mitsotakis planning to repay rescue loans early and trim the ratio of debt to economic output below 140% by 2027 from a high of 206% in 2020, investors had already been piling into Greek bonds.
The benefits of attaining investment status will be huge and haven’t been fully priced in yet, according to Bank of Greece Governor Yannis Stournaras. Only one in 10 funds can invest in a jurisdiction rated below that, he said last month.
Other Mitsotakis promises for his second term include cutting unemployment to 8%, boosting exports to 60% of gross domestic product and returning to primary budget surpluses of 2%-2.5% of GDP a year.
“Structural reforms that have meaningfully curtailed high non-performing loan ratios and substantively enhanced banking-system stability alongside policies aligned with Recovery and Resilience Facility funding and the European Semester mobilizing investment and boosting recovery” also supported Friday’s action, Scope said.
–With assistance from Sonja Wind, Aline Oyamada and Hari Govind.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
