World Economy

Moody’s Maintains Junk Rating for Greece Debt

Moody’s Maintains Junk Rating for Greece DebtMoody’s Maintains Junk Rating for Greece Debt

Moody’s has maintained its deep junk “Caa3” credit rating for Greek government debt, but has upgraded its outlook following recent political breakthroughs.

“Moody’s Investors Service Saturday confirmed Greece’s government bond rating at Caa3 and changed the outlook to stable,” the agency said in a statement, NDTV reported.

“The key drivers behind the confirmation are the approval of the third bailout program, and the emergence of a political configuration that is slightly more supportive than its predecessors for the implementation of reforms which the program will require,” it added.

Moody’s cut its credit rating for Greece to deep-junk just–two steps above “default”–in July, shortly before a referendum on the terms of the third bailout.

“Notwithstanding the positive developments the Caa3 rating continues to incorporate a high level of implementation risk given Greece’s weak institutions and past poor track-record of implementing conditions of financial support,” the statement added.

 Economy to Contract

The Greek economy is expected to contract by less than 2%, maybe even 1.5%, Economy Minister George Stathakis said in a radio interview.

Stathakis noted, however: “I dare not give the exact number, but we hinted two weeks ago that it would probably fall below 2%. Now, we can say for sure that it will reach this level. I think a positive rate will be seen in the first half of 2016 and surely in the second quarter of 2016”, Greek Reporter  reported.

Commenting on the absorption of community funds and investments, the Greek minister noted: “Two days before we leave the government we signed a new loan with the European Investment Bank, worth €1.0 billion, aimed to cover funding gaps. We have received an advanced payment of €300 million and we expect to fully absorb €4.5 billion by the end of the year.”

Stathakis expressed his confidence that the first review of bailout program will be completed on time and successfully, since the country needed to complete the bank recapitalization program by the end of the year.”