Economists say Moody’s upgrade of Greek rating paves way for 10-year bond issue

Rating agency Moody's announced on Friday it has upgraded Greece's sovereign credit rating by two notches to "B1" with a stable outlook, from the "B3" rating with a positive outlook it had granted Greece just over a year earlier.

Economists expected this upgrade to assist Greece in its next foray in the markets, probably with a 10-year bond.

In a statement, Moody's explained that its upgrade reflected the strengthening of Greece's economy thanks to the implementation of reforms, the likelihood of a sustained strong fiscal performance, and the enhancement of public debt sustainability.

Greek bond yields in the secondary market have already dropped to a decade-low, with the 10-year note's rate standing at 3.65 percent on Friday.

"Greece benefits from the fact it has no open fronts at this stage and the international juncture is favorable, with the Italian crisis out of the way," University of Athens Associate Professor of Economics Dimitris Kenourgios told Xinhua.

He added that the upgrade by Moody's is set to benefit the Greek government's plans for a full return to the markets, even if the country's sovereign rating remains well below investment grade by all rating agencies.

In this context economists expect Greece to tap the markets with a benchmark 10-year bond soon, the first since March 2010, albeit for only a small amount of money.

"Tapping the markets with a 10-year note for just 2.5 billion to 3 billion euros does not really make much of a difference for the economy. It is all to be done for appearances," commented Giorgos Stratopoulos, a financial analyst at think tank E-Kyklos in Athens.

He stressed that the Greek government has built a large cash buffer, estimated at over 30 billion euros, so it does not need to borrow to serve its obligations, but only to show the country has reverted to normality.

[Xinhua]