JP Morgan: Greece’s investment grade will have to wait

Greece will get investment grade at the end of 2023 or at the beginning of 2024, as estimated by JP Morgan, in contrast to Societe Generale, which sees investment grade as possible even before the elections and on April 21 by Standard & Poor’s.

“We see a high probability of further upgrades of low-rated countries such as Cyprus and Greece. Apart from these, we see limited scope for upgrades in other countries,” explains JPM.

The key dates for the ratings for Greece are January 27 and June 9 by Fitch Ratings, March 13 by DBRS, March 17 by Moody’s and April 21 by S&P.

he American bank predicts that the country’s nominal GDP will reach 224 billion euros this year and with a growth rate of 1% and inflation of 6% on average.

The primary surplus will be 1.1% and the budget deficit will move to 1.8%, with public debt to GDP at 162%. The current account deficit will remain at high levels of 8.6%.

Bonds

JP Morgan estimates that Greek spreads have also narrowed this week and are slightly outperforming Italy. The ten-year bond spread will move from 210 basis points to 225 basis points. in March this year, 235 bp in June, 200 bp in September and finally 185 bp, according to the bank’s forecasts.

The US bank remains broadly bullish on Greek bonds and expects Greece to trade flat or slightly at tighter spreads than Italy through the end of 2023.

Over the course of the year and in the shorter term, it remains consistently neutral on Greek bonds as it sees a decent chance that Greece will launch a new benchmark 10-year bond through a consortium in the coming weeks, which would potentially keep 10-year bonds under pressure during the duration of the period.

The majority of syndicated deals take place during the first quarter of the year, and January in particular.