Greek bonds have become a central focus for international investment houses, marking a remarkable turnaround from their crisis-era reputation. Once considered among Europe’s riskiest assets, Greece’s bonds are now increasingly favored over traditional safe havens, including German government debt.
Morgan Stanley underscored this shift by recommending a long position in Greek bonds against a short position in German bonds, citing Greece’s political and fiscal stability and growing uncertainty elsewhere in the euro area.
Capital inflows strengthen the case for Greek bonds
Foreign demand for Greek bonds remains robust. Data from the Bank of Greece show that international investors allocated €7.5 billion ($8,8 billion) to Greek government bonds and Treasury bills in the first half of 2025. This compares with €10 billion ($11 billion) recorded during the entirety of 2024, confirming the accelerating pace of inflows.
The sustained demand reflects rising confidence in Greece’s economic trajectory and its improving sovereign risk profile.
Fiscal Discipline Drives Bond Market Performance
The performance of Greek bonds continues to be supported by a favorable macroeconomic environment. Strong fiscal execution and consistent budget overperformance have reinforced expectations of further sovereign credit rating upgrades during 2025 and 2026.
The government’s ongoing strategy to reduce public debt, including early repayments of long-maturity loans, has further strengthened Greece’s credibility in capital markets and improved the long-term outlook for Greek bonds.
Opposition political parties, however, argue that this approach is flawed, insisting that channeling those funds into domestic investment, public services, and measures to support households would have produced stronger economic and social returns. They contend that prioritizing early debt repayments limits growth potential and deprives the real economy of much-needed resources, particularly at a time when cost-of-living pressures remain high.
Investment banks renew their confidence on Greek bonds
Major global banks remain constructive on Greece’s bonds. Bank of America describes Greek sovereign and corporate bonds as among the strongest performers in Europe, supported by solid growth and improving fiscal metrics.
Citi expects Greek bonds to outperform peers, forecasting tighter spreads and an additional credit upgrade in 2026. The bank highlights Greece’s strong economic momentum and contrasts it with the weaker fiscal outlook in several core European countries.
JP Morgan has also reiterated its positive stance, identifying Greece’s bonds as a top pick for 2026 due to strong macroeconomic fundamentals, political stability and limited refinancing needs.
Greece leads Europe in debt reduction
International rating agencies project that Greece will deliver the largest public debt reduction in Europe between 2019 and 2026. Fitch estimates a decline of more than 40 percentage points relative to GDP over that period.
Scope Ratings and UBS both highlight Greece’s rapid debt trajectory, with projections showing Greek bonds benefiting from a debt-to-GDP ratio that could fall below those of Italy and France before the end of the decade. UBS also forecasts above-average economic growth for Greece in 2026.
Wood & Co and Capital Economics estimate that Greece’s debt ratio could approach or fall near 100 percent of GDP by 2030, further strengthening the long-term outlook for Greek bonds.
Credit upgrades narrow the gap with core Europe
Since Greece emerged from its bailout programs it has secured multiple credit rating upgrades across all major agencies, culminating in the restoration of investment grade. While some peers face downgrade risks, Greece’s faster debt reduction path positions Greek bonds for further upgrades.
Markets have already priced in this improvement, with Greece’s bonds trading at lower borrowing costs than those of Italy and France. Analysts suggest that if current trends persist, Greece could move closer to the “A” rating category within the next two years.