S&P downgrade of PPC reflects looming cash-flow danger

A move by the credit rating agency Standard & Poors to further downgrade the main power utility PPC’s rating to CCC- last month and also place the utility’s debt to its high-alert Credit Watch category reflect, according to the agency, a growing concern surrounding PPC’s financial prospects over the next twelve months as well as an impression that the Greek banking system is offering less support to the utility.

In its analysis, the credit rating agency noted that further clarification is needed on the utility’s bond refinancing plan and the Greek State’s amount and payment process for its planned 25 percent acquisition of the power grid operator IPTO, a utility subsidiary.

Interestingly, the credit rating agency’s poor assessment of PPC, warning of a cash-shortage threat within the next three months, coincided with the finalization of an agreement between PPC and the country’s four main banks for their provision of a new loan.