GIG Economic Bulletin – 18 October 2021

Two major securitisation deals put the Greek systemic banks within reach of single-digit NPE ratios, while the Prime Minister cut the ribbon on two emblematic digital projects – Lamda Hellix’s Green Data Centre in Attica and Pfizer’s Digital Innovation Centre in Thessaloniki.

Economic BulletinInsights
Greece’s banking sector is gaining traction on the reduction of NPE ratios thanks to the completion of milestone securitisation deals partially backed by the Greek state’s Hercules scheme. Railway projects valued at €3.3 billion are slated to be rolled out this month, emblematic projects led by Pfizer and Lamda Hellix broke ground, while applications for 8.5 GW of wind power have been submitted by developers in the past 12 months.

Macro

The Hellenic Statistical Authority (ELSTAT) has revised the official 2020 growth figure down to -9% GDP from the initial estimate of -8.2%, on the basis of finalised annual figures for household expenditure, balance of trade, employment and a number of other key indicators.

The new IMF forecasts suggest that at the end of 2022 Greek GDP will reach €3 billion higher than it was in 2019, recovering fully from the 2020 recession. The Fund expects 6.5% growth for 2021, slowing down to 4.6% next year.

August business turnover hit €23 billion compared to €17.4 billion the same month last year, an increase of almost a third. The hospitality and catering sectors were the biggest winners, recording an increase of over 116%.

Unemployment dropped to 13.9% in August according to ELSTAT, compared to 16.9% the same month last year. This is the lowest figure since October 2010 and the first time since then that it has dropped below 14%.

September saw a positive employment balance, with almost 20,000 more hirings than departures, compared to a negative balance of almost 10,000 in August, according to the Labour Ministry’s Ergani database. There were, however, 29% more departures than September last year reflecting the end of the tourism season combined with the tapering of pandemic support programmes.

Debt / GGBs

The PDMA’s plan to prepay up to €7 billion of public debt by the end of this year is intended to improve Greece’s debt profile and speed up the process of attaining investment grade. The prepayment will involve the full repayment of the IMF loans and two instalments of the GLF loans, and will drop the debt ratio by 4 percentage points. Ratings agencies appear willing to push Greece up by one notch early next year should the debt resume a declining path and the situation in the banking sector continue to improve.

Repaying the balance of the €1.69 billion currently owed to the IMF will also change Greece’s relationship with the Fund from debtor to full partner. The transaction will require approval from the European institutions and, particularly, the ESM.

Digital

Greek Prime Minister Kyriakos Mitsotakis formally inaugurated two major technology projects, a €70 million LEED-certified data centre being built by Lamda Hellix in Attica, which will be the largest in Greece, and Pfizer’s Digital Innovation Centre in Thessaloniki.

Infrastructure

Railway projects worth a total €3.3 billion are due to be rolled out this month. In addition to €2.5-3 billion of public-private infrastructure projects already in progress, another €1.5 billion of works will be added by early 2022, including irrigation projects and dams.

A passenger train in Greece. Copyright: OSE

Privatisations

Greece’s superfund HCAP recorded net profits of €58.6 million in 2020, down by 11% from 2019. Based on its charter, HCAP has approved a €22.2 million dividend towards the Greek state. HCAP has notched up significant developments in H2 of the current year with the Hellinikon transfer, the closing of the Egnatia Highway tender for €1.5 billion and DEPA Infrastructure for €733 million.

Real Estate

New building permit issuance slowed to 6.8% Y-o-Y in July, according to a report by ELSTAT. The deceleration follows a 17.6% increase in June and 62.9% in May as the construction industry exited the lockdown.

Green Transition

Developers have submitted applications for a total 8.5 GW of wind power in the past 12 months, while 4.5 GW have been fully licensed, already meeting 50% of the national climate change target of 9 GW by 2030. According to figures presented at the Energypress Renewable & Storage Forum, Greece could also be hosting an estimated 7 GW of offshore wind power by 2050.

The Greek government has announced at €320 million initiative to kickstart a “Smart Cities” initiative. The money will fund the digitisation of city infrastructure to increase efficiency and reduce energy use.

Banks

Eurobank managed to drop its NPE ratio down to 7.3% following the completion of the Mexico securitisation deal with doValue. Mexico consists of 275,000 loans of which 85% are SME loans and 15% are large corporate loans. The nominal value of the portfolio is €5.2 billion, and €1.5 billion will be guaranteed by the Greek state through the Hercules scheme.

NBG’s Frontier securitisation deal with DoValue, Fortress, and Bain Capital is reportedly complete. The investors will pay €160 million for the €5.7 billion portfolio, which also comes with 130 staff from NBG with experience in NPE management. The portfolio includes 190,000 loans, 77% of which are mortgages, 18% SME loans, and 5% consumer loans. The transaction will bring the bank’s NPE ratio down to 13%, and the deal will bring NBG’s NPE ratio down to 12.7%.

Piraeus Bank’s Terra project is nearing conclusion after receiving two binding offers by Dromeus, backed by Blackstone, and the Invel/Prodea consortium. The project consists of roughly 3,000 commercial and residential properties with a total value of €1 billion, making it the largest property portfolio sale of recent years.

Stock Market

The ASE general index notched up 0.23% weekly gains to close at 894.74 points.

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