GIG Economic Bulletin – 6 September 2021

Another successful market foray raised €2.5 billion for the Greek state and confirmed investors’ confidence in the Greek economy, while two major privatisations in the energy sector attracted binding offers from major global investors and asset managers.

Economic BulletinInsights
The privatisation of Greece’s strategic energy assets is attracting leading global investors and asset managers with four binding offers having been made for a 49% stake in distribution network operator HEDNO/DEDDIE, while privatisation fund HRADF has requested improved financial offers from the two final bidders for 100% of gas distribution network DEPA Infrastructure. Meanwhile, a new strategic investment framework that aims to improve clarity for potential investors has been submitted for public consultation.

Macro

Economic Sentiment Index rose by 1.8 points in August to reach 113 points, according to the European Commission’s index. The index value has increased by 22 points Y-o-Y from August 2020.

Retail sales rose by 11.7% in June, recording the third straight monthly rise as measured by the Hellenic Statistical Authority (ELSTAT). Automotive fuel, pharmaceuticals and cosmetics, and clothing and footwear accounted for the biggest increases by value. Volumes rose by 10.8% in the same month.

New business formation recorded a 2% increase in the first eight months of 2021 compared to the same period a year ago. At the same time, there were 46.5% fewer closures, according to figures published by the companies’ register GEMI.

Electricity prices for businesses and consumers are set to rise as a knock-on effect of wholesale prices which have rocketed by 70% since January and currently stand at 157 euros/MWh, the most expensive in Europe. The government is planning to announce a raft of measures to soften the impact to consumers.

Fiscal

Prime Minister Kyriakos Mitsotakis is set to announce a raft of tax relief measures at the Thessaloniki International Fair in the coming week, including permanent cuts to the ENFIA property tax, corporate tax, tax advance rates, the solidarity levy and social insurance contributions, as well as a freeze on VAT in catering and tourism at the current reduced levels.

GGBs

Greece drew €2.5 billion from the reopening of two bonds, a 5-year and a 30-year issue. Final demand totalled €18.9 billion, almost evenly split between the two issues, and the high demand pushed yields to 0.02% and 1.675% respectively, raising €1.5 billion for the 5-year, and €1 billion for the 30-year.

Green Investments

Addressing the IUCN World Conservation Conference in Marseille, Prime Minister Kyriakos Mitsotakis outlined 6+1 actions aimed at protecting biodiversity in the Greek seas and across the Mediterranean. The pledges include protecting 30% of the Mediterranean’s marine and coastal areas by 2030, introducing an ecosystem-based approach to marine spatial planning, banning fishing from 10% of Greek seas, implementing a sustainable aquiculture plan, reducing plastic waste in the sea by 50% and microplastics by 30%, and developing a sustainable tourism strategy. Mitsotakis also promised to champion the full implementation of the EU’s nature conservation legislation.

Greece will take on IUCN’s presidency in 2023. Copyright: Dimitris Papamitsos/PM’s Office

The Greek authorities are working with the European Commission to produce a “green taxonomy” which will certify green bonds. The taxonomy is planned to come into effect in 2022, when the Greek government plans to issue its first green sovereign bond. In addition, there are plans for tax and other incentives for the issuance and trading of green corporate bonds. Over €2.5 billion of green bonds have already been issued by Greek companies.

Privatisations

Public Power Corporation (PPC) has received four binding offers from international private equity groups and asset managers for a 49% stake in distribution network operator HEDNO/DEDDIE. The bidders are CVC Capital Partners, First Sentier, KKR and the Macquarie Group. HEDNO manages around 240,000 km of power distribution networks with major expansion and upgrade potential, including plans for a 5G tie-in. The bids will be examined for their technical content before the financial offers are unsealed.

Privatisation fund HRADF has requested improved financial offers from both bidders for gas distribution network DEPA Infrastructure. Italgas and Czech group EP Investment Advisors are in the running to acquire 100% of DEPA Infrastructure. The size of the initial bids has not been officially disclosed.

The process for the sale of 30% of Athens International Airport which was postponed due to the pandemic looks set to re-open in spring 2022. Ten investment vehicles had expressed interest during the initial phase of the tender.

Strategic Investments

The Development Ministry has published a new strategic investment framework for public consultation, in a bid to improve clarity for potential investors. The framework includes a categorisation by total budget and job creation, with investments meeting certain size criteria guaranteed 12 years of favourable tax treatment, speedy licensing, and subsidies for certain expenses.

Real Estate

Banks are turning their attention to finding buyers for the substantial real estate portfolios, totalling 25,000 properties at an estimated value of €7 billion, amassed during foreclosure auctions. An estimated 55-60% of the total are residential properties, 30-35% are commercial and 10% are plots of land.

Greece’s national pension fund EFKA is starting a push to develop its extensive real estate portfolio to generate income, starting with 13 properties in prime locations in Athens. The objective value of the portfolio is €1 billion, while the commercial value is much higher.

Banks

Eurobank is planning to make its first dividend pay-out for several years in 2022. The bank’s H1 2021 results show profits of €190 million, while its NPE ratio is expected to come down to 8% by year end.

Stock Market

The ASE general index closed Friday at 915.05 points, with marginal weekly gains of 0.07% after four days of negative performance that wiped €1.07 billion off its value. Bank stocks, however, gained 2.78% on a weekly basis.

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