Standard & Poor raises Greece to investment grade for first time in more than a decade

October 30, 2023

ATHENS — Greece’s credit rating was raised to investment grade by Standard & Poor’s in the first such move by one of the three major rating agencies since the country was shaken by the debt crisis more than a decade ago.

S&P Global upgraded Greece late Friday to BBB- from BB+, citing the country’s improved budgetary position, in a move that the government hopes will boost market confidence, attract foreign investments and lower borrowing costs. S&P said the ratings outlook is stable.

“Proud of the recognition of what our country has achieved,” Greek Prime Minister Kyriakos Mitsotakis posted on social media. “We are determined to continue our reform agenda, a path that is attracting investment, creating jobs and achieving inclusive growth.”

Securing investment grade was a key target for the conservative leader, who secured a second term with a landslide victory in June.

The move back into investment grade at S&P comes more than a decade after Greece was brought to the brink of bankruptcy and a eurozone exit. After three bailout programs that channeled some €290 billion of loans to Athens, along with onerous austerity measures imposed by creditors, the country exited the bailout era in 2018, but had the dubious distinction of being the only eurozone member whose sovereign debt had a junk rating.

Finance Minister Kostis Hatzidakis hailed the S&P upgrade and pledged to maintain prudent budgetary policies. “The country faces a historic window of opportunity through a combination of the right economic policy mixture with political stability,” he said in a statement.

The main opposition Syriza party criticized the Mitsotakis administration after the upgrade.

“The investment grade rests on the clay feet of a crumbling health service, an underperforming education, public infrastructures that are being dismantled, labor rights that are being violated, real income that is falling,” Syriza leader Stefanos Kasselakis posted, adding that “the standard of living should rise to investment grade.”

The European Stability Mechanism called the upgrade “a great achievement and a game changer” for Greece. “Greece now needs to build a track record and retain investors’ confidence in being a strong and stable investment grade country,” the ESM, the eurozone’s bailout fund, said in a statement. “Greece must keep the reform momentum, preserve its prudent fiscal position, and continue the path of its modernization.”

S&P said a further reduction in the country’s debt as a percentage of annual economic output could prompt another upgrade, but added it is cautious about political pressures hindering Greece’s ability to sustain large primary budget surpluses. Greece expects economic output to rise 3 percent in 2024, following a projected 2.3 percent growth this year, more than twice the eurozone average.

The other two major ratings agencies, Fitch and Moody’s, rate Greece one notch below investment grade. DBRS Morningstar upgraded Greece’s rating to investment grade BBB last month. Fitch is expected to reassess Greece on December 1.

France and Italy, meanwhile, both avoided a downgrade. A downgrade could have spelled problems for the two debt-ridden countries, if markets started doubting their economic soundness.

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