Despite concerns over increasing debt loads burdening several Eurozone countries, S&P on Thursday appeared reassuring over Greece and Portugal, forecasting servicing costs t will remain restrained until 2026 for the two countries.

According to the international ratings agency, this trend is aided by the fact that a significant portion of the two countries’ foreign debt is from borrowing from other European states at lower interest rates, around 20% for Portugal and 75% for Greece, respectively.

In Greece’s case, for instance, the country will benefit from a longer maturity, on average, of roughly 20 years, a period that extends the time before higher yields (due to ECB interest rates) affect interest payments.

Specifically, S&P noted that “…Portugal’s and Greece’s interest payments, which were similar to Spain’s in 2022 (2.4% of GDP), will remain contained out to 2026. This will be supported by the countries’ still significant shares of lower cost official debt (at about 20% for Portugal and 75% for Greece) and the expected decline in government debt as a share of GDP (interest reduces mechanically on declining outstanding debt). Greece will also benefit from a very long average maturity of about 20 years, which extends the time before higher yields pass-through into interest payments.”