FINANCE

More projects for Greece 2.0

More projects for Greece 2.0

More than 350 investment plans, mostly in the energy sector and budgeted at 1.8 billion euros in total, are about to enter the “Greece 2.0” subsidies portfolio.

Competent officials tell Kathimerini that they are all mature investment proposals that have already secured the banks’ approval and are about to get the nod from the assessors that banks have appointed to determine which plans get to the European-Union subsidized package until the Finance Ministry completes its register.

Banks’ chief executives appeared optimistic at this week’s Banking Summit organized by Kathimerini’s Money Review website, regarding the access of large enterprises to the EU funds – unlike the smaller corporations.

Market sources say the access of larger companies to the Next Generation EU loans has extra significance at a time when the geopolitical crisis has sent state and corporate bonds soaring, increasing the cost of raising funds to finance investment plans.

Such an example is Public Power Corporation, which last July issued a 500-million-euro bond with an interest of 3.375%; last week its yield soared to 5.16%, while a €775 million bond issued a year ago with an interest of 3.9% has reached 5.4%. This means that were PPC to issue a similar bond today it would see its borrowing costs soar.

Mytilineos issued a €500 million bond last April with a 2.25% interest that is now near 3.86%, and the Hellenic Petroleum bond of €600 million, issued with an interest of 2% in 2019, now has a yield of 3.12%.

The recent pressure on corporate bond spreads, the same sources tell Kathimerini, are limiting the options to draw cheap funding even for the major players, thereby rendering “the low interest rates of the Next Generation EU loans more attractive for one more reason.” The reference rate of those loans is a particularly low 0.35%, which grows depending on the credit rating and the collateral of each company.

Debt issues by Greek enterprises in the form of eurobonds are quite limited, as the rating of local businesses remains low as Greece’s sovereign rating has not yet reached investment grade.