The belief that her announcement ECB, that can buys Greek government bonds until end of 2024, reduces the risk abruptly higher borrowing costs as well as the Extraordinary Pandemic Program (PEPP) ends, expressed the Fitch Ratings.
He also noted that the ECB confirmed on Thursday that net purchases of PEPP assets would cease by the end of March 2022, but extended the one-year bond reinvestment period until the end of 2024.
The ECB, according to the house, also noted that, during potential market pressures related to the pandemic, its reinvestments in bonds purchased through PEPP “can be flexibly adapted over time, types of assets and jurisdictions”. , including the Greek bond market.
The PEPP has been an important source of funding flexibility for Greece, whose government bonds are not eligible for other ECB programs due to the fact that they are not rated investment grade by the houses. By the end of November, the ECB had bought Greek government securities worth 34.9 billion euros (19.3% of estimated GDP in 2021).
Purchases through PEPP, according to Fitch, helped keep Greek debt’s interest rates low, with the 10-year yield falling to around 1.3% from over 2% in May 2020.
Other factors also support the sustainability of public debt. Greece’s significant liquidity cushion is projected to be close to 18% of GDP at the end of the year, which covers service costs for the entire 2022.
The favorable nature of most bonds, as noted, means that the average service cost is low and the amortization plans are manageable.
The house then estimates that the debt-to-GDP ratio fell from a high of 2020 to 206.3%, to 197.3% this year, and that the ECB will extend the waiver for Greek government bonds as collateral after June 2022.
In closing, he said the ECB is expected to remain flexible in managing Greek debt, in order to avoid negative effects on banks’ financing and liquidity.