Moody’s Upgrades City of Athens Rating, Outlook Stable

Photo source: Municipality of Athens

International credit agency Moody’s announced that it had upgraded the City of Athens rating to Ba3 from B1, adding that it maintained a stable outlook.

This rating comes after Moody’s upgraded the Greek government rating to Ba3 from B1 earlier this month.

According to Moody’s, the rationale behind the decision “reflects its close operational and financial linkages with the central government as well as the expectation of continued strong intrinsic strengths of Athens”.

The credit agency goes on to note that the overall improvement in the country’s sovereign credit profile indicates “a reduction in the systemic risk to which the City of Athens is exposed”.

Moody’s adds that despite the impact of the coronavirus pandemic on both Greece and Athens, the long-term improvements started before the pandemic provide “resilience to the shock”.

Also, Moody’s said it expects Athens to benefit from Greece’s improved sovereign fiscal position given its key role as the country’s economic and financial hub.

Greece’s improved position is also expected to secure greater predictability of government transfers to Athens, which account for an additional 30 percent of the city’s operating revenue, thus lowering the risk surrounding the city’s revenue projections and facilitating the achievement of fiscal targets.

Moody’s analysts underline the importance of better governance and continued digitization of public administration and the positive impact on revenue growth in the medium term, particularly in terms of tax collection.

The agency added that  it expects any shortfall in the city’s operating revenue resulting from Covid-19 to be “largely contained in 2020-21 and to be mitigated by additional central government transfers”.

Athens is expected to continue to record positive operating outcomes in the range of 2-3 percent, the report said, adding that the city has satisfactorily managed its cash flow and gradually reduced its debt burden over the past few years.

Athens debt stock is set to come to 84 million euros, representing a low 25 percent of its projected operating revenue, down from 29 percent in 2019.

“Numbers are assessed with numbers. The evaluation of Athens Municipality finances reflects one truth: the respect with which we manage Athenians’ money. It also reflects the transparency of our finances. It is an important acknowledgement of our unceasing effort to utilize every euro for the benefit of the city and its people,” said Athens Mayor Kostas Bakoyannis.