Political risk is back in its “equation”. Greeceas after tragedy in Tempe investors are embarking on a comprehensive analysis of data that determines political correlations in the run-up to the upcoming elections.

Uncertainty around Greece is back and concerns both the timing of the elections and how these latest developments could affect the outcome of the vote. This is how domestic analysts explain the sharp fall of 2.92%, which was recorded yesterday by the stock exchange, while Greek bonds, although they continue to show stability – due to the fact that a large percentage of them are in the EKT portfolio – “received” warnings from international analysts that their recent successes are exaggerated, also because of the political situation.

While until recently one of the strong catalysts for the impressive performance of Greek stocks and bonds has been the absence of political risk, with A.A. register the biggest profit internationally and Greek bond spread posting the biggest drop in the euro area since the start of the ECB’s tightening cycle in July 2022, market prices have moved in recent days. This change does not mean that there is a fear that the next government will not continue the course of reforms. This simply reflects the fact that investors currently see a bleak political picture and prefer to stand aside and wait until it becomes more visible.

Big drop A.A. yesterday at 2.92%, and the pressure on bonds is associated with increased uncertainty.

These developments seem to explain the wait-and-see attitude that Scope Ratings adopted last Friday. As noted Dennis Senchief analyst at home, ink”, the house published a typical “control note” rather than an appraisal report. Scope believes that since Greece’s previous rating change (December 2022) was very recent and spanned a 12-18 month horizon, it would be preferable not to make a new change.

Elections, however, are definitely on the House’s mind. As Sen noted related question from “K”, “the upcoming elections are likely to increase uncertainty about Greece’s economic policy and institutional relationships in the long term, which could lead markets to overestimate the risk to the country’s outlook.” Furthermore, the recent superiority of Greek bonds and especially Italian bonds is not justified by Greece’s credit risk profile, which “remains significantly higher than Italy’s in the long term”, according to the Chamber. While Greece’s debt ratio is on a downward trajectory, it remains much higher than Italy’s and is only expected to approach it by 2027.

Citigroup’s sentiment is similar, as analyst Amana Bansala notes that Greek bonds’ recent dominance over Italian bonds appears to be under threat due to lingering political uncertainty leading up to the upcoming elections. And this despite the fact that while “Keeping Mr. Mitsotakis in power could be perhaps the most favorable scenario for the market, however, the wiretapping scandal and the recent tragedy in Tempi may further turn public opinion against him.” In addition, he stressed, the prospects are complicated by changes in the electoral legislation, since two rounds of elections mean a long period of political uncertainty in the country.