At a time when the European Central Bank has just started buying corporate bonds, reducing the cost of borrowing for European enterprises, Greek companies can only borrow at very high interest rates owing to the country risk.
Consequently Greek enterprises’ foreign rivals can today borrow at rates below 3 percent, while in Greece the owners of blue chip companies have to pay an average rate of 6-7 percent. For example, Hellenic Petroleum was unable to refinance a recent bond and had to use its cash reserves to pay up.
Up until July 2020, a total of seven listed companies will have to refinance bonds whose nominal value adds up to 4.075 billion euros. No corporate bonds are set to mature before the end of 2016 as most expiry dates have been moved to the 2017-20 period, so enterprises do not immediately need to seek capital in the current recessionary climate.
The problems in the issue of international corporate bonds started in the summer of 2014, and culminated after the January 2015 elections with the SYRIZA victory.
While in theory a Greek company could borrow on coupons from 4 to 4.5 percent in early October 2014, today the cost of borrowing has soared above 8 or even 9 percent, and with the premium risk coverage and various expenses the rate soars to 11-12 percent, making such an investment move completely prohibitive.