National Bank of Greece’s Global covered bond programme, including its euro benchmark, was upgraded from Baa1 to A3 yesterday (Tuesday), while Eurobank Ergasias’s second programme was lifted from Baa3 to Baa2, following an upgrade of Greece on Friday.

Moody’s upgraded the sovereign from B1 to Ba3, and the country ceiling from Baa1 to A3, citing ongoing reforms and positive growth prospects, notwithstanding the near term impact of the pandemic, particularly on the tourism sector. It said the banking sector has improved further over the past year, but still requires strong action to improve weak asset quality.

The upgrade of the National Bank of Greece (NBG) Global covered bond programme from Baa1 to A3 takes it to the updated country ceiling, and it is now also constrained by the Timely Payment Indicator (TPI) of “probable-high”. NBG’s outstanding euro benchmark is issued off this programme, while it also has a second programme.

Eurobank’s programme 2 was also upgraded, from Baa3 to Baa2, on the back of the sovereign upgrade, and furthermore an improvement in its TPI from “very improbable” to “improbable”.

“The raising of the TPI is underpinned by the combination of different factors that have lowered the refinancing risk of Greek covered bonds,” said Moody’s, “including (1) the improvement of the Greek economy as reflected in the upgrade of the Greek’s sovereign ratings, and (2) stronger market liquidity, reflecting more favourable operating conditions for Greek banks.”

The covered bonds’ rating is now constrained by the TPI.

Eurobank has three covered bond programmes and its outstanding benchmark is issued off programme 1.