Scope Ratings affirms the BBB- rating on Greece with stable outlook
Scope ratings affirmed the BB- rating on Greece with stable outlook, expecting the Greek economy to experience comparatively sturdy growth of 2.2% in 2024 and 2.3% in 2025, comparable to an estimated 2.1% growth from last year. The debt-to-GDP ratio should decline to around 140% by 2028 (from an estimated 160% at end-2023), supported by sustained primary surpluses over the forthcoming years, largely offsetting a parallel rise of the interest-payment burden.
Total building activity increased in October
According to ELSTAT, total building activity (private-public), as this is measured by the number of building permits issued, increased by 8.7% y-o-y in October 2023. In surface and volume terms, building activity increased by 32.7% and by 40.6% y-o-y respectively. In the November 2022- October 2023 period, Greek building activity grew by 9.6% y-o-y in terms of permits, while also increased by 15.7% y-o-y in terms of surface and by 20.4% y-o-y in terms of volume.
Facts: According to BoG, total credit to the economy (incl. the general government) came in at EUR 195.3bn in December 2023 (+2.5% y-o-y, positive monthly net flow by EUR 2,776m), on the back of positive monthly net flow of the private sector by EUR 3.894m, whilst the General Government recorded a negative monthly net flow of EUR 1.1bn. Loans to the private sector increased by 3.6% y-o-y to EUR 118.4bn.
Comment: Net credit expansion posted a record in December due to corporate lending. In more detail, business loans reached EUR 76.4bn (+6.9% y-o-y, positive monthly flow by EUR 3.799m). Loans to sole proprietors stood at EUR 4.6bn (-1.3% y-o-y, positive monthly net flow by EUR 94m). Moreover, household lending was shaped at EUR ca 37.4bn (-2.0% y-o-y, positive monthly net flow by EUR 1m). Housing loans came in at EUR 28.5bn (-3.5% y-o-y, negative monthly net flow of EUR 21m). Consumer loans reached EUR 8.7bn (+3.4% y-o-y, positive monthly net flow by EUR 20m). Corporate loans accounted for 64% of private sector loans, household loans for 32% and other loans for the remaining 4%. Credit penetration stood at just 62% of GDP23e. Positive news on banks.
Facts: BoG announced that system deposits came in at EUR 201.6bn (+2.3% y-o-y, positive monthly net flow by EUR 5.315m) in December 2023. General Government deposits reached EUR 6.8bn (-14.6% y-o-y, negative monthly net flow by EUR 1.060m) and private sector deposits amounted to EUR ca194.8bn (+3.1% y-o-y, positive monthly net flow by EUR 6.376m). Corporate deposits came in at EUR ca48.2bn (+1.6% y-o-y, positive monthly net flow by EUR 3.292m) and household deposits at EUR 146.6bn (+3.5% y-o-y, positive monthly net flow by EUR 3.084m). Household deposits accounted for 75% of private sector deposits and corporate for the remaining 25%.
Comment: The monthly boom in private sector deposits in December is attributed to both corporate and household deposits. Time deposits slackened their pace and increased by just 64m m-o-m to EUR 36.6bn and accounted for 18.8% of private sector deposits against 19.4% in November 18.8% of private sector deposits against 19.4% in November. Liquidity remains ample, with the LDR at 60.8% vs. 60.1% in November 2023 and the commercial surplus increased to EUR 76.4bn from 75.2bn in November. Private sector deposits rose by EUR 6.0bn (+3.2% y-o-y) in 2023 and accounted for 101% of GDP23e.
Greek banks are in a better position to tackle with turbulence-BoG Deputy Governor
The Deputy Governor of Bank of Greece stated in an interview to capital.gr that Greek banks have improved substantially their performance in 2023 and are in a better position to tackle with any turbulence that may arise.
Demand for the Athens Airport IPO in excess of EUR 3bn (press)
Total combined demand from the Greek and the International books exceeds EUR 2bn, covering multiple times the 57.5m shares offered (9.5m shares of which will be channeled to the Greek investors or 10.5m in case of excess demand, whereas the 46.5m shares will be disposed through a private placement), four days ahead of the end of the subscription period.
S&P revises OPAP’s outlook to negative following a similar action on its major holder
S&P revised OPAP’s Outlook to Negative from Stable following similar action on parent Allwyn International, keeping the ‘BB’ Rating unchanged.
Entersoft FY2023 results out on 29 February 2024
The company announced that it will report FY2023 results on Thursday 29 February, the AGM will take place on 17 May and the stock will trade ex-dividend on 31 May.
BANKS
Private sector lending growth in December accelerated to 3.6% yoy (vs. 2.8% in Nov) driven by a growth of 6.9% in corporate credit on the back of a strong EUR 3.7bn new net flow. Trends in retail lending remained unchanged (-2.0% yoy with -3.5% in mortgages and +3.4% in consumer). In terms of deposits, private sector balances grew in December by 3.1% yoy with a seasonal spike in mom flows at EUR 6.4bn. Retail time deposits remained flattish mom at c.25% of the total.
Data do indicate a gradual recovery in credit growth after a relatively weak 2023. We expect this improvement to continue well into 2024E and 2025E driven by the large corporate space and the normalization in repayments. The lower than expected shift from core to time deposits should continue to support margins.
OPAP <OPAP GA, OW>
S&P revised affirmed ‘BB’ rating but revised outlook to negative on the back of weaker credit metrics for Allwyn for 2024E, as OPAP rating is constrained by that on Allwyn (SAZKA Group).
Market Comment // Despite the negative opening on Friday, Greek stocks quickly staged an impressive comeback, with the ASE managing to eke out gains of 0.59%, eventually settling at 1360.89 points. Trading activity decreased though to €79m below the 100-d moving average of 114mn. Elvalhalcor (+5.5%) and Thrace Plastics (+3.1%) stood out among gainers, followed by Viohalco (+2.8%), HelleniQ Energy (+2.4%), Trena Energy (+1.9%), Sarantis (+1.7%), Titan (+1.5%), Eurobank (+1.4%), GekTerna (+1.3%) and Coca-Cola HBC (+1.1%). On the other hand, Papoutsanis (-3.4%) and Entersoft (-3.1%) led laggards, Epsilon, Dimand, EYDAP and Premia also retreating more than 1%. Other names in the red included Trade Estates (-0.9%), Austriacard (-0.8%), Optima (-0.8%), Hellenic Exchanges (-0.7%) and Quest (-0.6%). Today’s EU futures point to a slightly negative opening, as investors wade through the latest economic data ahead of the Fed announcement and corporate earnings releases later this week.
Athens International Airport (AIA) // Demand for the IPO currently underway is reportedly strong with the book attracting bids over €3bn in the first 2 days as per press. As a reminder, the secondary offering will run until 1st February, with the price range set at €7-8.2 per share (corresponding to c8-9x EV/EBITDA). The offering price is set to be announced on 2nd February while the outcome of the offering will be made public on 6th February. The shares will commence trading on 7th February.
Economy // Scope reiterated on Friday Greece’s rating (BBB-) and outlook (stable), as largely expected. The agency expects GDP growth of 2.2-2.3% in 2024-25 and a reduction of the Debt/GDP ratio to 140% by 2028e (from c160% in 2023). As a reminder other upcoming rating agency releases will be on 8th March (DBRS) and 15th March (Moody’s).
Banks // According to Bank of Greece data, private sector deposits in December increased by €6.4bn m/m, reaching €194.8bn (+3.1% y/y), following an outflow of €0.9bn in November. Furthermore, there was an acceleration in the flow of credit to the private sector, with monthly inflows of €3.9bn, from the €0.8bn inflows observed in November. This resulted in annual inflows of c€4.8bn in 2023e (in sync with our assumption of c€5bn PE growth).
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