Bond Market Awaits Moody’s and DBRS Ratings Update on Greece

As the market anticipates the upcoming ratings review of Greece’s economy by major credit rating agencies, trading activity in Greek bonds is gaining momentum. The DBRS rating update is expected by the end of the week, with the agency currently placing Greece in the BBB (low) category while maintaining a positive outlook. However, the decision from Moody’s on March 14th carries greater significance, as this agency retains Greece’s credit rating at non-investment grade (Ba1). Despite this, Moody’s also projects positive economic prospects, leaving room for an upgrade to investment grade. According to rating agencies, further upgrades could result from sustained economic performance, prudent fiscal policies, continued structural reforms enhancing competitiveness, and further reductions in banks’ non-performing loan portfolios, aligning them closer to EU averages. Greek bonds continue to outperform relative to their credit rating, reflecting both the country’s economic progress and concerns about the low growth prospects of Eurozone core countries. On Thursday, March 6th, the European Central Bank may announce interest rate cuts amid rising defense spending pressures. Additionally, plans by the European Commission to activate mechanisms allowing member states to increase defense spending without triggering fiscal penalties could mobilize nearly €800 billion if fully utilized. In the secondary bond market, specifically within the Bank of Greece’s Electronic Trading System (ΗΔΑΤ), trading volumes reached €218 million, with €90 million attributed to buy orders. The yield on the 10-year Greek bond settled at 3.29%, compared to 2.47% for its German counterpart, resulting in a spread of 0.82%.