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MNI INTERVIEW: War Means ECB Must Clarify Greek Support-Scope


The Russian invasion of Ukraine makes it necessary for the European Central Bank to clarify how it will support Greece should inflation and market uncertainty continue to rise, Dennis Shen, lead country analyst at Scope Ratings in Berlin told MNI.

“ECB policy over the forthcoming period and degree of central-bank support for Greek financial markets is another area we require further visibility around – critical for ensuring maintenance of an 'ECB put' to arrest market pressure on Greek government bonds should risk sentiment worsen owing to the Russia-Ukraine conflict and as inflation rises further,” Shen wrote in response to emailed questions.

The Governing Council said last December that it would purchase Greek bonds over and above rollovers of redemptions from the Pandemic Emergency Purchase Programme if needed to avoid market fragmentation.


Athens's continued economic progress will be highlighted by the expected conclusion this summer of the European Commission's post-programme Enhanced Surveillance framework, Shen said, with the early repayment of the country’s outstanding IMF loan and partial early prepayment of Greek Loan Facility loans this year further critical steps in the right direction.

Scope upgraded Greece to BB+, one notch below the investment grade necessary for inclusion in the ECB's asset purchase programme, in September 2021, and reaffirmed its stance in February this year.

“While I do not want to per se overstate credit rating implications of concluding Enhanced Surveillance,” Shen said, “naturally we are keen to see signals of a continued constructive approach of Greece outside Enhanced Surveillance along objectives agreed with European partners as well as prudence in fiscal policy making and the structural reform agenda.”

Scope is in the process of applying for ECAF status, which would mean it joins other prominent ratings agencies in determining the eligibility of debt for ECB purchases.

An ECB spokesperson declined to comment on the matter when contacted by MNI.

MNI London Bureau | +44 20 3983 7894 |
MNI London Bureau | +44 20 3983 7894 |

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