Alvarez & Marsal Greece outlook, return to investment grade presents new opportunities for both issuers and investors points out, the house predicts that the funds that will be directed to the Greek economy, after upgrading the rating to investment grade, are estimated to reach 50-100 billion dollars or even higher in the next 3 to 5 years.
Alvarez & Marsal’s methodology includes a comprehensive analysis of the top 50 investors in each sector, including pension funds, sovereign wealth funds, insurance companies and asset managers, with a collective asset under management ( AUM) exceeding $120 trillion.
The proportion of loans classified as non-performing on banks’ balance sheets has fallen significantly from more than 50% in 2016 to around 7% in 2023. Economists at rating agencies and investment banks, including Goldman Sachs, predict that Greece will continue to outperform compared to other countries, both this year and next year”, underlines the house.
Alvarez & Marsal tries to quantify the positive prospects of the future investment flow and categorize the potential investors, as the investment grade status unlocks opportunities for a significant inflow of foreign capital, which were previously unable to invest in Greece, despite the recognition of its positive prospects.
The investment grade is a milestone for the Greek economy, attracting long-term capital and creating favorable liquidity conditions for the government, banks, insurance funds, households and businesses.
Probably the most significant and immediate effect will occur through the reintroduction of Greek public debt into major government bond indices (eg FTSE EU Government Bond index, Bloomberg Barclays Euro Sovereign index). This move will trigger a wave of buying by institutional investors and other long-term debt holders who tend to take a long position in the index.
To a similar extent to government debt, corporate debt will also be included in bond indices and the upgrading of the economy will trigger autonomous corporate upgrades (although this will probably take longer). The upgrade will also allow the private sector to benefit from reduced and less volatile financing costs. Banks will usually be the first to move into refinancing, with yields on bank issues already down.