Commerzbank – Greece may return to investment rating next fall

The upgrade of Greece’s debt by the credit rating agency DBRS will boost expectations for the country to return to investment rating next year, a Commerzbank analyst told Reuters.

“The upgrade of Greece, combined with the positive outlook, by DBRS is expected to fuel expectations for a return to investment ratings next year,” said Rainer Gunderman.

The European Central Bank (ECB) exceptionally included Greek bonds in the emergency bond buying program last year due to the pandemic. When this program expires next year, the inclusion of Greek bonds in the ECB’s regular program requires at least one investment rating (from one of the major rating agencies considered by the ECB).

This can be done, the Commerzbank analyst added, as early as next autumn as Greece must secure a two-tier upgrade from one of three rating agencies.

DBRS upgraded Greece to BB on Friday, two notches below the investment grade, with positive outlook, which means that a further upgrade is possible.

The bond market

Eurozone bond yields fell today as falling commodity prices, worries about Chinese real estate firm Evergrande and caution ahead of a US Federal Reserve meeting this week put pressure on equities and strengthened securities.

Yields on German 10-year bonds fell 3 basis points to -0.31%, while yields on other 10-year Eurozone bonds fell 1-3 basis points.

“It is better to have invested in government bonds than stocks and other more risky assets, this is what we are seeing today,” said a DZ Bank analyst.

“No one really knows if this is a rapidly disintegrating crisis in China or the beginning of something bigger,” he said, referring to the Evergrande issue. its prospects “, he added.