Morningstar DBRS Upgrades Greece to BBB, Trend Changed to Stable

Canada-based DBRS Ratings on Friday announced that it has upgraded Greece’s Long-Term Foreign and local currency – issuer ratings to BBB, up from BBB (low). Additionally, the international ratings firm upgraded the country’s short-term foreign and local currency- issuer ratings to R-2 (high) from R-2 (middle).

The trend on all ratings has returned to stable from positive, it added.

In an announcement on its site, DBRS notes that “…the upgrade reflects Morningstar DBRS’ view that legacy risks in the banking system have receded along with a continuation in over performance in fiscal targets. Greek banks have improved their fundamentals, are more resilient and are well positioned to provide credit to the economy, even after the end of the Next Generation EU (NGEU). This reflects lower legacy risks, with a significant fall in the gross nonperforming loan ratio, now close to the European Union (EU) average, coupled with the expectation that deferred tax credits (DTC) will fall faster than initially anticipated. Moreover, supported by the recovery of the Greek economy and strong investor interest, the Hellenic Financial Stability Fund (HFSF) has reduced its stakes in systemic banks loosening the link between the state and the banking sector. Morningstar DBRS also notes that the