National Bank of Greece: Follow-up to Greece's ceiling
Providing rationale to its upgrade, Moody’s Corporation ( MCO) indicated its upgrade actions reflect the rating agency's decision to raise the Greek country ceiling to B3 from Caa2, following the upgrade of Greece's government bond rating to Caa3 from C and upgrades of the deposit ratings of Alpha Bank A.E. ADR OTCMKTS:ALBKY and NBG. Last month, Moody's Investors Services upgraded Greece's government bond rating to Caa3 from C and indicated the outlook on the rating is now stable. However, the short term ratings remain Not Prime.
Greece is A+
Interestingly, last month, Japonica Partners in its note titled 'Greece is A+' remarked it is an irrefutable fact that Greece has accomplished one of history's most extraordinary sovereign fiscal rejuvenations, an A+ performance. The note further added now is the time to progress beyond the current economically irrational and anachronistic accounting that obfuscates that Greece merits an A+ credit rating and government bond interest costs below 5%.
Moody's ratings assumptions
Moody’s Corporation ( MCO) in its report indicated it determines covered bond ratings using a two-step process: an expected loss analysis and a “timely payment indicator” TPI framework analysis. The rating agency uses its Covered Bond Model COBOL to determine a rating based on the expected loss on the bond. COBOL determines expected loss as 1 a function of the issuer’s probability of default measured by the issuer’s rating; and 2 the stressed losses on the cover pool assets following issuer default.