Moody’s, one of the world’s leading credit rating agencies, is set to release its next evaluation of Greece’s creditworthiness later tonight. This review carries significant weight, as Moody’s remains the only major rating agency yet to grant Greece an investment-grade rating.

Economic Progress and Investor Expectations

In September 2024, Moody’s maintained Greece’s rating at Ba1, one notch below investment grade, but upgraded the country’s outlook from “stable” to “positive.” This reflected improvements in the banking sector and Greece’s better-than-expected economic performance.

Just days ago, Canadian rating agency DBRS upgraded Greece once again. However, a Moody’s upgrade would hold greater significance, given its reputation as the most stringent among the top agencies.

There is growing anticipation that Moody’s may finally upgrade Greece to investment grade in its upcoming review. This expectation is supported by:

• Stronger fiscal metrics: Greece’s public debt has been declining from 160% of GDP in 2023 and is expected to continue on a downward trajectory.
• Economic resilience and growth: The Greek economy is showing robust performance, bolstering investor confidence.
• Banking sector recovery: Greek banks have posted strong profits, paid dividends, reduced non-performing loans (NPLs) to below 3%, and strengthened capital reserves by accelerating the write-off of deferred tax assets.

However, some analysts believe that Moody’s might delay the upgrade until its next scheduled review on September 19.

The Impact of an Investment-Grade Rating

Achieving investment-grade status would be a major milestone for Greece, further boosting international investor confidence and improving access to capital markets. An upgrade would:

• Enhance Greece’s credibility in global markets.
• Lower borrowing costs for the Greek government by reducing bond yields.
• Allow banks and businesses to secure funding under more favorable terms.

All eyes are now on Moody’s verdict, which could mark a turning point for Greece’s economic future.