Greek economy: New year’s beginning with assessment and new borrowing

Greece is on the path of seeking ratings from agencies with the start of January, while in the same month it is expected to pass the “test” of the markets, considering the possibility of new borrowing. The timing of a new exit to the markets depends on conditions in the international bond market. It also links to the messages that Fitch will send. On January 27, the rating agency has an appointment with the Greek economy and will publish its verdict on the Greek debt.

2023 is a milestone year for Greek bonds and the Greek economy as a key goal has been set: to conquer the investment grade from which Greece is one step away. Standard & Poor’s upgraded our country to the BB+ grade, the Canadian DBRS to the BB high grade and the German SCOPE to the BB+ grade. Fitch rates the country BB, two notches below investment grade. Moody’s remains the most “strict” among ratings agencies, keeping Greece three places below the investment grade, at the Ba3 level.

According to estimates, the financial staff may proceed with issuing a 10-year bond at the end of January, after the Fitch report. The amount will vary between 1-2 billion euros, which will depend on market conditions. However, Greek bonds are showing resistance and yields on the 5-year are moving at 3.5% and on the 10-year at 4.4%.

The analysts have pointed out that the favorable macroeconomic framework and the long duration of the European financial aid “support” the downward course of the Greek debt to GDP to 150% by 2025. At the same time, the comments on the cash reserves (at 38 billion .) and for the fiscal course of 2023. The financial needs per year move to approximately 6 billion euros in the next four years and thus there is no risk for the level of reserves. The financial staff is in no rush for a new exit if conditions are unfavorable. The main goal of a new exit is for Greece to be present, sending a message of constant presence.

In the planning of the Public Debt Management Organization and the Ministry of Finance, the borrowing of 2023 is limited, and to fluctuate at the levels of 2022, due to the increased yields in the markets. This translates to around 7 billion Euros.