Now that the board at main power utility PPC has approved the terms of a 200 million-euro loan offered by the country’s four main banks, the focus of attention has turned to how this development may influence the utility’s poor credit rating maintained by Standard and Poors.
Just last month, on February 9, the credit rating agency gave PPC a Creditwatch negative grade, which, simply put, means that the corporation is being monitored for fear of possible bankruptcy.
An official at Standard and Poors, contacted for an update, noted that February’s rating remains valid, adding that no revision worthy of any announcement has been planned.
Ratings issued by the agency remain valid for three months. If a new announcement is not delivered once this three-month period has expired, then the exisiting status is automatically renewed.
PPC’s Standard and Poors downgrade in February was linked to a number of factors. In the short-term, PPC’s delay in reaching a final agreement with Greece’s four main banks for the 200 million-euro loan, needed to finance a bond maturing in April, contributed to the negative ranking.
In the long-term, the utility’s debt-servicing ability is not considered sustainable, especially as a result of the pending and prolonged conclusion of the bailout’s second review, which is preventing the local banking system from supplying credit to PPC. The utility’s cash flow has been heavily affected by an alarming unpaid receivables figure.