None
Bonds muted despite Moody’s; IG by S&P, Fitch seen within “easy reach”
None
Bonds are little changed at midday, despite the double notch upgrade by Moody’s. The agency lifted Greece’s sovereign-credit rating bytwo notches to Ba1 from Ba3, with stable outlook, just one step away from the investment grade status.
Local assets had priced in the move sometime ago and that was reflected in their performance, traders argued. Moreover, the exact fiscal impact from the damages caused by the Daniel Storm remains unclear and it is another source of uncertainty.
However, the good news is that Moody’s move paves the way for S&P and Fitch-both are currently one notch below investment grade- to reestablish the investment rating status for Greece.
“If the hard-nosed Moody’s is now just one notch below the investment rating, the other two agencies can easily re-establish the investment grade for Greece in their next reviews,” Constantine Boukas, an asset manager with Beta Securities said.
S&P is scheduled to review Greece’s shape on October 20 and Fitch on December 1.
Goldman Sachs had recently argued that the next review by S&P and Fitch will be important catalysts for local bonds and banks.
“DBRS ratings are among four major rating agencies (including S&P, Fitch, Moody’s) which the ECB uses to determine requirements when sovereign bonds are used as a collateral. We note however that the methodology of many bond indices require at least one IG-rating also from the S&P, Fitch or Moody’s,” GS had noted.
Recall, that earlier in the month, Canadian-based DBRS Morningstar lifted Greece’s credit rating to investment-grade status to BBB (low) from BB(high).
At midday, the yield on the 10-year benchmark is at 4.10%, with the spread over bund at 141 bps, broadly unchanged.
READ ALSO
