PPC preparing market return with 1Q €300-400m bond issue

The main power utility PPC is planning a return to capital markets with a bond issue expected to range between 300 and 400 million euros in the first quarter of 2019, signalling a return to normality.

The power utility has already hired a financial consultant, now establishing contacts with prospective international investors.

Confirming that the issue’s preparations have reached a far more advanced stage than has been believed until now, PPC’s chief executive Manolis Panagiotakis, speaking yesterday at the Hellenic-American Chamber of Commerce, noted progress in talks with investors.

However, Panagiotakis also pointed out certain investment funds appear unwilling to participate in the forthcoming bond issue due to environmental reasons, not financial. PPC’s portfolio is heavily reliant on lignite-related assets.

The power utility’s first-quarter bond issue will be planned to precede the maturity date of a May, 2014 bond issue and could be staged in London. According to current estimates, the issue’s interest rate is expected to be set below 5 percent, possibly less than 4.5 percent.

The issue’s precise date will depend on an anticipated credit rating upgrade expected at PPC. Standard and Poors has noted a Greece upgrade would prompt a matching upgrade for state-controlled PPC.

 

Attention turns to agency following loan approval by PPC board

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.