Standard & Poor’s retains Greece’s credit rating at B+, cites risks

International rating agency Standard & Poor’s (S&P) on Friday confirmed Greece’s credit rating at B+ with a positive outlook, but refrained from an upgrade citing risks associated to the upcoming general election later this year.

S&P stated that its rating reflects the improved prospects of the Greek economy, along with its strong fiscal performance and a particularly favorable restructuring of the public debt. It projected a 2.3 percent growth for this year and a further expansion from 2020 to 2022.

Nevertheless it warned of risks associated to the international environment and the upcoming general election in Greece which could slow down further economic reforms.

This year Athens has tapped the bond markets twice issuing a five-year bond in January and a benchmark 10-year bond in March, with yields in constant decline since then. However, Greece’s S&P rating remains four notches below investment grade.

Nikolina Kosteletou, associate professor of economics at Athens University, told Xinhua that although Greece was successful in its bond issues, “there are other factors that matter too. For instance, it is doubtful how you can get an upgrade when you have a debt ratio of 180 percent (of the gross domestic product).”

The pre-election course of Greek politics, which S&P touched on, is particularly significant for investors, Kosteletou said, adding that “Greece will require a smooth election process to retain the confidence of the markets, otherwise there may be some uncertainties arising over the economy that will reverse the positive feedback we get from markets today.”

Greece emerged from its third bailout program last August and its benchmark bond yield fell in mid-April to a 13-year low of 3.27 percent.

Opposition leader Kyriakos Mitsotakis said recently that the market is pricing in the change in government that opinion polls predict for this fall’s election. “The markets certainly are a step ahead, but this is easy to be reversed too,” Kosteletou said.

For example, in case the European parliamentary election in Greece on May 26 shows a closer-than-forecast gap between the right-wing opposition party New Democracy and the ruling leftist Syriza party, “uncertainty will grow again,” Kosteletou added.