Rising interest rates on Greek State bonds – 3.32 percent for a 5-year bond, 4 percent for a 7-year bond, and 4.33 percent for a 10-year bond – despite a recent credit rating upgrade by Moody’s, are blocking the main power utility PPC’s way towards a new bond issue of its own.

State-controlled PPC’s standing in international capital markets is directly linked with that of the Greek State, market officials explained. This reflection has consistently become apparent in all the PPC credit ratings delivered by Standard Poor’s, monitoring Greek utilities. In all its reviews, the agency has stressed that PPC’s credit rating reflects that of the Greek State.

At a recent company event held to usher in 2018, PPC’s chief executive Manolis Panagiotakis informed that the power utility is considering making a return to global bond markets. This intention coincides with corporate bond issue plans by other enterprises, two of these linked to the energy sector – GEK Terna and Coral, a Motor Oil Hellas subsidiary.

For the time being, PPC will need to hold back on its plan. PPC must be backed by a business plan that is capable of convincing the market of an improved future before the utility can consider a bond issue. The consulting fim McKinsey is currently working on a business plan for PPC. Uncertainty concerning PPC’s future following the prospective bailout-required disinvestment of 40 percent of its lignite units, also needs to be erased ahead of any bond issue. The degree of success of a PPC effort to limit unpaid receivables and improve its electricity bills collection record is another crucial factor for the market.

PPC will need to finalize plans, by April, 2019, for the recapitalization of a loan extended by the country’s main banks. Also, a 350-million euro remainder of an international bond is approaching maturity. In related announcements made yesterday by the utility, no mention was made of an EIB loan approaching maturity – 190 million euros this year and 200 million euros in 2019.