French bank Societe Generale (SocGen) considers it possible that Standard & Poor’s Ratings (S&P Global Ratings)will upgrade the Greek economy on April 19, 2024, stressing the economy’s fundamentals justify a positive change.
Despite SocGen underlining that the S&P Global Ratings move would contradict the general negative sentiment prevailing across Europe by credit ratings, the French bank recommends a long position in Greek bonds against Belgian ones.
According to Societe Generale, the spreads of European governments have started widening in the past two weeks after months of notable decline. While the risk climate remains positive and credit margins are generally stable, market attention seems to be turning to the fundamental elements of European government bonds (EGB) in light of certain key assessments in the second quarter of the year.
Societe Generale sees more risks for France in Europe, estimating that the spread between bonds and Germany could widen to 55 basis points if market concerns persist until the assessments in April and May.
Although debt sustainability presents a concern, Societe Generale notes that it is not pose an immediate worry, and investors could refocus on their positions if spreads stabilize again.
