What the Upgrade of Greece’s Economy by Moody’s Means

With Moody’s upgrading Greece to investment grade, a painful 14-year cycle of debt crisis, memoranda, and recession finally and irrevocably closes. While these challenges are in the past for the Greek economy, Moody’s was the last of the major rating agencies to keep Greece in the ‘junk’ category. Following their recent announcement on March 14, 2025, upgrading Greece from Ba1 to Baa3, with emphasis on the improvement in bank performance and progress in reducing non-performing loans to the European average, nothing in Greece resembles the decade-long ordeal it endured. Now, bond markets can view Greece through a different lens, leading to significant economic benefits. Despite caveats and warnings about potential setbacks, Moody’s upgrade further strengthens Greece’s credibility and credit profile. This gives the ‘green light’ even to the most skeptical funds and investment organizations, encouraging them to invest heavily in Greek debt. Progress acknowledged by other rating agencies has already allowed Greece to borrow under better terms than some countries with higher ratings. The increased demand for Greek bonds brought about by Moody’s upgrade multiplies the quality and potential of Greek debt, lowering borrowing costs for Greece. Lower borrowing costs mean more favorable repayment terms, faster debt reduction, and more available funds for investments, growth, and social interventions. As outgoing Finance Minister Kostis Hatzidakis emphasized, Moody’s upgrade marks the beginning of a new era for the Greek economy, ensuring the upward trend of recent years will continue with rapid debt reduction and high growth rates. This positive trajectory, reinforced by Moody’s decision, is evident in how markets now perceive Greece each time the Public Debt Management Agency issues new debt. A notable example is Greece’s recent issuance of €3 billion this week, attracting offers exceeding €56.5 billion, the largest amount ever recorded for any public offering by the country.