Consider it a kiss to the bond investors who are expected to oversubscribe the upcoming latest “triumphal” Greek return to the bond markets, as soon as next week. Moments ago, rather unexpectedly, S&P raised its outlook on Greece from Stable to Positive, but reaffirmed the Greek rating at B-. The rating agency, said it believes that “recovering economic growth, alongside legislated fiscal reforms and further debt relief, should enable Greece to reduce its general government debt-to-GDP ratio and debt servicing costs through 2020.”
We have therefore revised the outlook on Greece to positive from stable while affirming our ‘B-‘ long-term foreign and local currency sovereign credit ratings. The positive outlook indicates our view that, over the next 12 months, there is at least a one-in-three probability that we could raise the ratings.
In other words, buy the Greek bonds, but beware a repeat of what happened in 2014.
Full S&P note below (link):
Outlook On Greece Ratings Revised To Positive; ‘B-‘ Long-Term Ratings Affirmed RATING ACTION
On July 21, 2017, S&P Global Ratings revised the outlook on the Hellenic Republic (Greece) to positive from stable. We affirmed the ‘B-/B’ long- and short-term foreign and local currency sovereign credit ratings.
The outlook revision reflects our expectation that Greece’s general government debt and debt servicing costs will gradually decline, supported by economic recovery, legislated fiscal measures through 2020, and a commitment from Greece’s creditors, specifically from the Eurogroup, to further improve the sustainability of its sovereign debt burden.
The Eurogroup, in its statement on June 15, 2017, has agreed to facilitate market access for Greece through the creation of a cash buffer via disbursements over and above the amount needed for the Greek government to meet debt servicing obligations and pay down domestic arrears. In our opinion, this support is likely to pave the way for Greece to successfully reenter sovereign bond markets this year.
This post was published at Zero Hedge on Jul 21, 2017.