Greek Debt Proves Resilient Ahead of Critical Moody’s Rating – The Three Positive Signs

With an enhanced image of resilience, the Greek economy is heading towards tonight’s (14.03.2025) evaluation by Moody’s. The timing of this critical assessment, among all rating agencies, especially from the American Moody’s, couldn’t be more opportune as Greek debt remains buoyant without sinking. Firstly, the European debt crisis following discussions in the EU regarding increased defense spending and the constitutional suspension of Germany’s debt brake had limited effects on Greek bonds. The spread of the Greek 10-year bond against the bund is at historic lows, not because Greek yields are decreasing but due to rising German and other European counterparts. Despite a rise in yields over the past ten days, Greek bonds haven’t seen the same rally as others, with increases up to 13 basis points less than European peers. This favorable stance was evident yesterday (13.03.2025) when the Public Debt Management Agency proceeded with a reissue of older long-term bonds, a 15-year and a 30-year. Demand exceeded the target by over 18 times, reaching €56 billion and raising €3 billion for public funds. Moreover, with the January issuance of a 10-year bond that raised €4 billion, nearly 90% of Greece’s 2025 borrowing program has been covered. These achievements come after DBRS’s upgrade last week, moving Greece one step higher within investment grade, assigning BBB (from BBB low) with neutral outlooks replacing positive ones. Why Moody’s rating matters: The economic team anticipates another vote of confidence from Moody’s. Tonight’s evaluation holds particular significance as the Americans are the last major agency keeping Greece out of investment grade, two steps below DBRS, maintaining Greece at Ba1 with positive prospects since September 2024. An upgrade to investment grade would send strong signals to debt markets. If it doesn’t happen tonight, Greece will have to wait until next September for the coveted investment grade from all major agencies, though geopolitical and economic uncertainties pose questions for all states. Regardless of Moody’s decision tonight, DBRS’s unexpected upgrade last week is expected to push sentiment positively, further pressuring Moody’s, who remains the last to keep Greece in junk status.