The ATHENS STOCK EXCHANGE Tense

Greece has stabilized its economy and begun to grow. The authorities deserve credit for largely eliminating macroeconomic imbalances, including via a significant fiscal adjustment, and for many other reforms undertaken in recent years. Reflecting these efforts, European partners have provided significant support, most recently agreeing to a final loan disbursement under the ESM program and additional debt relief. However, as the country exits the program era in August, crisis legacies and an unfinished policy reform agenda in most areas weigh on Greece’s prospects. High public debt, weak bank balance sheets, reliance on capital controls and emergency liquidity assistance, and worrisome social indicators, including still-high unemployment, all weigh on growth and social cohesion. Fiscal adjustment has been sizable, but has relied on distortionary high tax rates on still-narrow bases and growth-detrimental discretionary spending cuts, and efforts to bring down tax and spending arrears h...

S&P has upgraded  OTE ’s long-term rating to ‘BB+’ from ‘BB’, maintaining its positive outlook that reflects the possibility of a one-notch upgrade over the next 12 months in the event of a sovereign upgrade. As OTE generates more than 70% of its revenues and more than 80% of its EBITDA in Greece, the rating upgrade reflects S&P’s upward revision of Greece's country risk on improving economic prospects and policy predictability.

  PPC’s  BoD will discuss the extension of the scope of the contract signed with QUALCO S.A. which was hired a few months ago with the purpose of assisting the utility to the collection of overdue bills.   The original agreement with Qualco included 100,000-120,000 customers with unpaid bills and if results were positive it would expand to approximately 2m customers. According to unofficial information, the original target for collection of EUR 50m within 2018 has been revised upwards to around EUR 150m.  

  Moody’s  has upgraded its outlook on  Greek banking system  to  positive  from stable on improving funding and asset risk over the next 12 to 18 months. Specifically, Moody’s said: a) GDP is forecast to grow at 2% this year and 2.2% in 2019, driven by a strong increase in exports and services including tourism, b) Greek banks  will likely meet the targets for non-performing loans committed to the regulator, reducing their non-performing exposures (NPEs) to around 35% of gross loans by the end of 2019, c) Greek banks have comfortable regulatory capital levels, with a common equity Tier 1 (CET1) ratio for the system of around 15.8% in March 2018, although sizeable Deferred Tax Assets (DTAs) continue to undermine the quality of such capital,  d) Most Greek banks are likely to remain marginally profitable through 2019, as credit and operating costs remain low, however net interest margins will remain pressured as banks continue to deleverage and ru...

Producer   Price Index in Industry  (PPI) rose 8.2% y-o-y in June 2018, driven by a 19.6% y-o-y increase in the production prices of energy goods. PPI in the non-domestic market soared 14.6% y-o-y due to higher producer prices in refined petroleum products (+45% y-o-y), while PPI in the domestic market posted a 6.2% y-o-y increase on the back of higher prices in refined petroleum products (+39% y-o-y) that more than offset reduced producer prices in lignite and coal mining (-11% y-o-y) and pharmaceutical products (-5% y-o-y).

  IMF’s  Article IV report for  Greek economy  (including an updated debt sustainability analysis) will say that further debt relief measures will be required in order to secure Greece’s access to capital markets in the long-term due to the very ambitious targets set for GDP growth rate and primary surplus. In this framework, Europeans’ commitment that they will take all necessary measures for debt after 2032, if needed, is crucial for IMF’s decision to participate in the post-bailout monitoring mechanism. The report will also focus on structural reforms, while it is expected to provide an opinion on the status of the banking system.

With an ATHEX filing, Kallitsantsis brothers notified that their participation in  Ellaktor  increased to 27.269% from 23.015% previously. Recall that Kallitsantsis brothers seek to replace Ellaktor’s top management at the next AGM on 25 July. Note that current management team (Leonidas Bobolas and Dimitris Koutras) together own approximately 22%.

Greece’s   privatization agency  (TAIPED) announced that Glencore Energy UK and Vitol Holding were qualified for the second phase of the tender for the acquisition of at least 50.1% of  ELPE . Reportedly, TAIPED sources claimed that Glencore’s recent legal issues in the US would not affect the tender.  

The third  NOME-type auction  is in the electricity market for 2018 is set to take place today, with the starting price increasing to EUR 36.34/MWh from EUR 32.05/MWh in previous auctions due to higher CO2 emission prices. Recall that in the previous two auctions in 2018 (February and April ) the price shaped at EUR 41.5/MWh and EUR 42.05/MWh respectively compared to an average SMP of EUR 50/MWh in the first four months. The SMP currently stands above EUR 60/MWh and although this is seasonal it should remain higher than usual driven by CO2 emission prices which currently stand at c.EUR 16/ton. Recall that NOME auctions has been government’s key measure for reducing PPC’s market share which currently stands at around 80% and should fall to 62.2% by the end of 2018 and to 49.24%  by the end of 2019. The continuation of the NOME scheme after 2019 will be determined by Greece’s creditors in September 2019 depending on progress on PPC’s market share reduction and other struct...

 HFSF BoD is set to convene today to examine the two candidates for the CEO post of  NBG  and decide accordingly. Same report adds that one of the two candidates is currently an employee of the bank and one candidate is from outside the bank but with a very long banking experience and good reputation. Capital.gr argues that the inside candidate is Mr Mylonas, the acting CEO and Deputy CEO of the bank and the outside executive possibly Mr. Karamouzis, Eurobank’s Chairman.

Ellaktor’s CEO  Leonidas Bobolas informed about the acquisition of 100,000 shares, representing 0.06% of total outstanding shares. On the other hand, according to euro2day.gr,  Kallitsantsis  brothers, who seek to replace Ellaktor’s top management at the next AGM (25 July), acquired yesterday an additional 4% stake, raising their participation in the company to approximately 27%. Note that current management team (Bobolas and Koutras) together own approximately 22%. In an interview with Bloomberg, CEO Bobolas pledged to stand down next year even if he wins the battle for control of the company (remaining however as a non-executive board member), making way to professional CEO hired by the new board.