PPC bond issue oversubscribed six times, key foreign investors dominant

International investment powerhouses and real-money investors, including US players, were key participants in power utility PPC’s bond issue this week, oversubscribed by six times with orders totaling three billion euros, a vote of confidence for the course being pursued by the company.

PPC promoted the issue by highlighting its comeback over the past year and a half.

Foreign investors – including institutional investors, private banks and hedge funds – comprised 70 percent of the issue’s subscribers, providing approximately 450 million euros of 650 million euros in total, according to estimates by sources.

The issue’s two coordinators, HSBC and Goldman Sachs, were still working on a finalized list of subscribers late last night.

Importantly, half the investment amount provided by foreign investors concerned real-money investors, including top global players handling portfolios worth trillions of dollars.

PPC’s issue, a sustainability-linked bond through which the utility has pledged, to investors, carbon emission reductions, was too good an offer to ignore. Its yield, 3.875 percent, was a standout prospect given far lower yields offered in the eurozone.

The results, since the order book’s opening on Monday, have exceeded PPC’s expectations in what is being hailed as an unprecedented success for a Greek bond issue, both in terms of the level of capital amounts offered and number of participants.

Also, this issue means PPC has succeeded in borrowing at an interest rate that is one-and-a-half percent below its current borrowing cost.

Banking sector officials pointed out the issue’s outcome highlights a wider change in perception of Greece by investors.

No extra time for PPC units sale, advisor HSBC informs

Prospective buyers taking part in the main power utility PPC’s bailout-required disinvestment of lignite units will need to submit their binding offers by the sale’s current January 23 deadline, at 12 pm, the procedure’s financial advisor HSBC has informed, dispelling rumors of a new deadline extension, energypress has understood.

Even so, participants will most likely remain adamant and request additional time as a number of matters concerning the disinvestment remain unclear. These include the outcome of a voluntary exit plan for employees at two power stations, Megalopoli and Meliti, included in the sale, and PPC’s ongoing negotiations with the owners of the Ahlada lignite mine, feeding the Meliti power station, for a lower supply price and longer supply agreement.

A comprehensive post-bailout review of Greece’s reform commitments is currently in progress. Keen for approval from the country’s lenders for the ongoing PPC disinvestment, the government will avoid taking any initiatives that could make it accountable for any further delays of the sale effort.

Market analysts expect ELPE 50.1% sale to reach over €2bn

Market analysts, including HSBC, in a new report, expect the ELPE group (Hellenic Petroleum) sale offering a 50.1 percent stake to exceed 2 billion euros.

Besides the privatization’s higher aspirations generated by ELPE’s strong profit figures, including a streak of records, international analysts are also pointing to excellent prospects for the petroleum group over the next two years, at least, as well as its limited exposure to mazut.

ELPE’s share ended trading last Friday at 7.57 euros but the petroleum group’s privatization may escalate its share price by 50 percent to 11.7 euros, according to the recent HSBC report, covering refineries in Europe, the Middle East and Africa (EMEA).

Given a share price of 11.7 euros, a 50.1 percent stake of ELPE would be worth 1.78 billion euros. Adding a 20 percent premium to this figure for the petroleum firm’s management rights also offered in the sale increases the value to 2.1 billion euros.

ELPE, it should also be noted, is one of the wider region’s few refineries which, with a minimal amount of facility adjustments, will be capable of producing new environmentally friendly shipping fuels by 2020. This prospect, promising even higher profit levels at ELPE in the near future, is seen adding to the petroleum group’s appeal among investors.

According to latest developments, buyers will be asked to submit binding offers within the first quarter of 2019.

Two new participants, US firm Carlyle and Algeria’s Sonatrach, are believed to be discussing respective partnerships with the privatization’s list of two existing candidates, Switzerland’s Glencore and Dutch company Vitol. No official announcements have been made on the rumored Glencore-Carlyle and Vitol-Sonatrach pairings.

TAIPED, the privatization fund, has yet to set a deadline for new partnerships.