What Fitch’s Retention of Greece’s BBB- Rating Means for the Country

In anticipation of future improvements, Greece’s economy remains steady as Fitch Ratings did not proceed with a new upgrade of the country’s credit rating yesterday (May 16, 2025) – contrary to many expectations. Instead, Fitch maintained the rating at BBB- while upgrading the outlook to positive, reaffirming Greece’s investment-grade status and paving the way for a potential future upgrade following its return to investment grade in December 2023. This decision comes shortly after the European Commission revised its growth forecasts for Greece upward, highlighting the country’s strong performance in investments and exports. However, these positive developments were not deemed sufficient at this time to convince Fitch to raise the credit rating further. Fitch is one of four major rating agencies that have placed Greece in the investment-grade category, alongside DBRS Morningstar, Moody’s, and S&P. The upgrade of the outlook indicates that Fitch sees significant potential for an upgrade within the next 12 months, with the next report on Greece expected on November 14. It is acknowledged that despite Greece entering a phase of recovery and stability, challenges remain. These include a high public debt burden, demographic pressures, inefficiencies in the justice and public administration systems, and relatively low GDP per capita compared to the Eurozone average. Additionally, non-performing loans persist within the economy, although they have decreased. Fitch’s recent announcement noted substantial fiscal surpluses, rapid debt reduction, and resilient growth but also highlighted concerns about social unrest due to delays in investigations like those involving Tempi, which could pressure fiscal policy relaxation. High defense spending compared to other European countries was also mentioned as limiting further increases. Practically, while no new upgrade occurred, the positive outlook confirms Greece’s investment-grade status, crucial for borrowing costs, bond inclusion in portfolios, and market image, while opening the door for further upgrades in the next evaluation. Attention now turns to upcoming reviews, with Scope Ratings set for May 30, DBRS on September 5, and Moody’s on September 19, whose potential upgrades could significantly impact markets and influence other agencies.