SME minibonds to bypass bank lending

LONDON – The first batch of issuance under a “minibond” program that the Athens Exchange Group (ATHEX) has been promoting to finance Greek SMEs is set for launch after the summer break.

Greece’s economic recovery is closely linked with the health of its small and medium-sized enterprises (SMEs), which make up 99.9 percent of its companies and employ 85 percent of the workforce compared with an EU-wide average of 66.4 percent, according to Pricewaterhouse Coopers. But these firms have increasingly found themselves starved of financing from the country’s creaking banks.

ATHEX is keeping its project to boost SME lending simple to start with, allowing companies to issue 5 million euros of bonds through the ENA STEP (support the entrepreneur) part of its alternative market listings.

“We are already working with issuers, both listed and non-listed, and expect the first issues in September,” said Nikolaos Porfyris, deputy COO of ATHEX.

“SMEs are one of the most important sources of growth for the economy but there is a funding gap of around 12-16 billion euros. There are some companies that are in good shape, despite the macro situation, that want to expand but lending is difficult due to the bank deleveraging – and expensive,” said Porfyris.

Greek SMEs have been hard hit by the lending drought due to an unprecedented 30 percent bad-loan ratio in the country’s banking system, which accounts for over 95 percent of SME lending in the country, according to a recent Oliver Wyman report. [IFR]