Greek Government Gets Green Light for Early Bailout Loan Repayment, S&P Signals Potential Economic Upgrade

Athens, June 4, 2025 — Standard & Poor’s (S&P) has given an implicit but clear endorsement to the Greek government’s plan to repay loans from the first bailout program ahead of schedule, according to analysts during a web briefing today. The move, which will partially draw on Greece’s €40.1 billion cash reserves as of Q1 2025, is not expected to impact the country’s credit rating or its prospects for further upgrades.

S&P projects Greece’s public debt to fall to 114% of GDP by 2028, unaffected by the reduction in cash reserves. The agency, which upgraded Greece’s credit rating to BBB/A2 on April 18 while maintaining a “stable” outlook, hinted at the possibility of a further upgrade. Analysts cited an expected improvement in Greece’s external imbalances, with the current account deficit projected to shrink by 2026. Limited exposure to the U.S. market was also noted as a positive factor, shielding Greece from the impact of tariffs imposed by the Trump administration.

Finance Minister Kyriakos Pierrakakis recently announced plans to clear the first bailout loans by 2031, a decade earlier than the original 2041 deadline. This move is expected to significantly ease Greece’s future debt burden.

Positive Outlook for Greek Banks

S&P also expressed optimism about the profitability of Greek banks, highlighting that National Bank and Eurobank already hold investment-grade ratings. The agency praised efforts to improve asset quality and bolster capital reserves. Greek banks are actively diversifying revenue streams to offset losses from declining interest rates, with notable moves including Alpha Bank’s acquisition of Astrobank and Eurobank’s purchase of Hellenic Bank. Alpha Bank’s acquisition of Axia Ventures and expansions into bancassurance—such as Piraeus Bank’s acquisition of Ethniki Asfalistiki and Eurobank’s purchase of CNP Assurance—were also highlighted.

However, concerns remain over household over-indebtedness, with €75 billion in non-performing loans transferred to servicers. Despite this, S&P forecasts the non-performing loan ratio for Greek banks to drop to 2.5%–3% by 2026.