ATHENS – Despite news Greece would receive an 8.3 billion euro installment from its international lenders and that a primary surplus of as much as 2.3 billion euros is looming, the ratings agency Moody’s said it would postpone its assessment of the country’s credit worthiness until August.
Moody’s cited the risk of political instability with the coalition government now trying to defend itself after a videotape emerged of a top aide to Prime Minister Antonis Samaras telling the spokesman for the extremist Golden Dawn party that the government concocted charges against the extremists.
That came barely more than a month before critical elections in May for the European Parliament and Greek municipalities with polls showing Samaras’ New Democracy Conservatives in a dogfight with the major opposition Coalition of the Radical Left (SYRIZA).
The government’s coalition partner, the once-dominant PASOK Socialists, are fighting for their political life near the bottom of the heap in the surveys.
Moody’s said there were fears that the government would have to call early elections in the next six months instead of running out its term to 2016, a development that could jeopardize whether 240 billion euros owed to the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) would be repaid as SYRIZA said it would revise or renege on the deals if it comes to power.
It is two years since Greece’s debt restructuring, when Moody’s downgraded Greek bonds to a Caa3 rating, nine notches below investment grade, after the government stiffed investors with 74 percent losses. The current government said it would also seek debt relief from the Troika as it doesn’t want to repay all it owes.
Since 2012, S&P and Fitch have both raised their ratings. Moody’s praised the just-passed reform bill in the Greek Parliament that the ratings agency said helps the likelihood of economic development but still stopped short of giving a rating.
The markets had been had been expecting an upgraded rating from Moody’s, given that Greek bonds are on the upswing and the government said it wanted to issue a small bond to test the waters before returning to private investors for loans.