By Dimitra DeFotis
Fitch Ratings affirmed its CCC credit rating for Greece Friday after the U.S. close, saying the country’s €86 billion ($92.5 billion) bailout “has reduced the risk of Greece defaulting on its private sector debt obligations.”
Fitch writes:
“The risks to the programme remain high. It will take some time for trust to be restored between Greece and its creditors, and further deadlocks in negotiations are possible. Meanwhile, the political situation in Greece remains unpredictable. An initial European Stability Mechanism disbursement of €13 billion in August relieved the acute liquidity strains on the government. Progress under the programme so far has been steady, although completion of the first review is unlikely before January, in our view. The programme conditionality is demanding and highly front-loaded. However, successful completion of the first review should unlock the promise of limited debt-relief on Greece’s official loans, providing an additional incentive.”
European creditors delayed a €2 billion payment earlier this week as Greece pushed back on austerity measures. See our post, “Greece on Strike: Bailout Cash Agreement This Weekend?” Fitch adds:
“The Greek government has completed most of the 49 “prior action” milestones required for a partial disbursement of €2 billion as well as funds to recapitalise the banking sector. Further milestones will be set for the release of an additional €1 billion and formal completion of the first review. The politically controversial issue of the Greek household insolvency and foreclosure framework is currently the key sticking point between the authorities and the institutions.”
Data released Friday showed the Greek economy slowed by 0.5% in the third quarter, better than consensus expectations for a 1% contraction. See our post, “Shrinking Greek GDP: Does It Matter?” An estimated 20,000 people took to the streets in Athens Thursday as part of a general strike and protest against austerity. Here’s how Greek equities fared for the week:
