Fitch: Awaiting today’s rating – Societe Generale’s analysis

The country is currently awaiting Fitch’s assessment of the Greek economy. With this evaluation, the cycle of evaluations of the first semester closes, with Greece being just before the threshold of the investment grade. Societe Generale expects an upgrade of the outlook of the Greek BB+ rating to positive from stable.

According to the French investment house, an upgrade to investment grade on either October 20 by S&P or December 1 by Fitch is now highly likely. Rating agencies have been rapidly upgrading Greece since 2016, with S&P and Fitch now rating Greece BB+, one notch below investment grade.

The analysis

As Societe Generale analysts note, the last time Fitch upgraded Greece was in January 2023, while on May 10 it published an optimistic comment on the Greek Stability Program, acknowledging the improvement of the country’s public finances. “Note that the Greek government’s program expects the debt-to-GDP ratio to fall to 135% by 2026, lower than Italy’s 2026 debt ratio projected by the IMF,” adds SocGen.

It is worth noting that Societe Generale estimates that Greece could regain its first investment grade rating even in October. Strong investment has boosted economic growth, while public debt has fallen rapidly after rising during the pandemic. As a large part of the Greek debt is in the form of loans to the official sector, its relatively low servicing costs and its very long maturity, reduce the effects of interest rate increases.

Therefore, analysts point out that rating agencies have rapidly upgraded Greece since 2016 and are now awaiting the outcome of the next election.