Last night’s decision by Morgan Stanley to downgrade power utility PPC’s share by deleting it from its MSCI Standard Greece List and adding it to the MSCI Small Cap list comes following a barrage of downgrades by analysts, culminating with one slightly less than a month ago by Standard & Poors to CCC+ status.

At the time, on April 22, the credit-rating agency cited increased liquidity risks arising from the continued deterioration of macroeconomic conditions in Greece and a contraction of funding sources available for the power utility.

S&P estimated that liquidity levels may continue to weaken significantly over the coming months. Another factor concerned the recovery of debts, as consumers are appearing increasingly reluctant to pay their electricity bills, the agency noted.

In a recent report published by Alpha Finance, analysts monitoring the PPC share made note of the risk of prospective tariff reductions, based on government announcements, while adding the prospect appears unlikely.

Alpha Finance analysts pointed out that significant capital needs exist at PPC, mainly for the corporation’s funding of Ptolemaida 5, a state-of-the-art power station planned for Ptolemaida, northern Greece. Two older lignite-fired power stations at the location are currently out of order following damages caused by a major fire. One of the stations was completely devastated. It is estimated that PPC’s capital needs in 2015 will amount to 300 million euros.

An electricity tariff cut at PPC would deprive the local electricity market of 280 million euros, which would need to be covered by the “recession-hit local banking system,” the Alpha Finance report concluded.

Yesterday’s Morgan Stanley index revisions will come into effect on May 29.