Moody’s: Greek pact with creditors raises likelihood of official-sector debt relief

Thursday, May 4th, 2017
Last Update: 09:18
Moody’s said in its 4May’17 Credit Outlook that the key positive of the recent agreement between Greece and its creditors is that it will potentially lead to further official-sector debt relief measures for Greece, which would render its debt burden more sustainable. The agreement should allow for the conclusion of the latest review of Greece’s support programme, and is a pre-condition for the release of a tranche of around €8bn in funds to Greece, which would allow Greece to meet large repayment obligations due in July.

Moody’s also said that improved repayment prospects would be an important positive signal for Greece’s ability to return to the private capital markets. The current MoU is scheduled to end in Aug’18, leaving Greece thereafter to fund its borrowing requirements entirely by issuing debt in the capital markets.

The conclusion of the 2nd review is also likely to pave the way for Greece’s bonds to be included in the ECB’s QE programme, providing further support to the sovereign regaining market access as well as improving domestic depositors’ sentiment.

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