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The decision not to update Greece’s credit rating, although it was planned for today, was made by Moody’s, which is not the first time this has happened, nor is it particularly surprising, especially since just three weeks ago and specifically on April 17, published a report on Greece confirming its rating and evaluating the impact of the pandemic on the economy.
It is worth noting that Moody’s confirmed on April 17 the “B1” that gives the country creditworthiness with stable prospects, and estimated that a recession this year will pass to 5% (and a recovery of 4% in 2021), emphasizing that El Greece’s credit profile is backed by a strong track record of meeting fiscal targets, accelerating reforms, and supporting European institutions. Although Greek debt remains very high, Greece benefits from its favorable maturity profile, as well as from the highly liquid “buffer”, as noted above.
The house emphasized that the Greek government reacted very early to the expansion of the crown, applying restrictive measures and support measures, but the pandemic will inevitably affect the Greek economy mainly through the tourism sector, which employs 26% of total jobs. in the country. . The third quarter of the year is a “key” for the industry since 60% of its annual income is generated during these months. Although more powerful domestic tourism will help, it will not be enough to cover the absence of international tourists. Greece remains a relatively closed economy and this, however, gives it an element of resistance to the crisis, he emphasized.
As the house pointed out at that time, although the fiscal deterioration will be significant this year, as well as in the entire eurozone, it will be temporary and there are no concerns about the financing of the country that can make use of the large “buffer” of liquidity and Join the new ECE QE is a very positive development.
On April 17, Moody’s also said it would not be quick to change its assessment of Greece in the midst of the crisis, which has raised international concerns. He said the Greek assessment could be improved if the negative impact of the pandemic on the economy is temporary, with a rapid recovery in the economy afterward, and if efforts to step up reforms and improve the return of the banking sector, which means waiting to see how the situation develops.
It is observed that from the other houses, S&P and DBRS rate Greece three steps below the investment grade, at “BB-” and “BB (low) respectively and recently downgraded the outlook to stable from positive, while Fitch gives better score, two steps below investment grade with stable prospects now positive before.
