Moody’s upgrades Greece’s rating to B3, maintains positive outlook

23 February 2018
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Moody’s on Wednesday upgraded Greece’s issuer rating to B3 from Caa2, while the country’s senior
unsecured bond and program ratings were also upgraded to B3/(P)B3 from
Caa2/(P)Caa2.

As expected, Moody’s said the outlook remains positive.

1. Greece has achieved material fiscal and institutional improvements
under its current adjustment programme, which Moody’s believes will be
sustained in the coming years. Those improvements in turn should help
support the recovery of the economy as well as the banking sector;

2. Moody’s believes that Greece will successfully conclude its third
support programme and return to self-sufficiency and market-based
funding. Its “clean” exit will be supported in the near term by a
substantial cash buffer and over the medium to long term by the strong
commitment of Greece’s euro area creditors to providing further debt
relief;

3. The risk of another default or restructuring on the debt owed to
private investors has therefore materially declined, and the uncertainty
around that judgment has also diminished materially. While Greece was at
a similar juncture in mid-2014, Moody’s believes that the risk of
reversal and derailment of the fiscal and economic progress achieved is
now materially lower.

The outlook on the ratings remains positive. Moody’s could further
upgrade the rating if the reforms implemented over the course of the
programme yielded results that are more positive than expected, leading
to sustained economic growth and a more rapid decline in the public debt
ratio in the context of a stable political environment.

The long-term country ceilings for foreign-currency and local-currency
bonds have been raised to Ba2 from B3, to reflect the reduced risk of
Greece exiting the euro area. The long-term ceilings for foreign-currency
and local-currency deposits have been raised to B3 from Caa2. The deposit
ceilings remain aligned with the government bond rating to reflect the
ongoing capital controls. The short-term foreign-currency bond and bank
deposit ceilings remain unchanged at Not Prime (NP).

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