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S&P Says Greece's Public Power Corp Likely To Default

S&P Says Greeces Public Power Corp Likely To Default
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Πεμ, 7 Ιουνίου 2012 - 17:52
Standard and Poor's Corp. Thursday said Greek utility Public Power Corp. (PPC.AT) will likely default in the near term, as a lack of resources to pay back its debt comes at a highly uncertain time in the country.
Standard and Poor's Corp. Thursday said Greek utility Public Power Corp. (PPC.AT) will likely default in the near term, as a lack of resources to pay back its debt comes at a highly uncertain time in the country.

The rating firm said PPC, which is 51% state owned, needs to repay nearly EUR1 billion of debt by the end of 2012, mostly to Greek banks, and that about half the amount comes due later this month.

"PPC will likely default on its obligations in the near term, as defined by our criteria, if we don't see rapid improvement in operating conditions and liquidity," the S&P report said.

S&P also said PPC would likely be unable to service its euro-denominated debt were Greece to readopt the drachma or adopt a new operating currency. S&P says there is a one-in-three chance of Greece leaving the euro zone.

S&P downgraded PPC to a CC rating from CCC, and warned of further rating cuts, given the company has nearly depleted its liquidity, and after earnings fell sharply, overdue receivables are climbing, and amid a lack of new credit facilities.

Given PPC's minimal levels of cash, and total current liabilities exceeding total assets by EUR900 million, the company mostly depends on external factors for funding in a fragile environment, S&P said.

"The negative outlook also takes into account PPC's near-term refinancing risk and the likelihood that enduring political uncertainty or deteriorating economic conditions could worsen the group's already ailing liquidity situation even if Greece does not exit the euro zone," the report said.

Most of PPC's EUR650 million debt maturing in the first quarter was extended for one quarter, S&P noted.

S&P rates Greece government debt at CCC with a stable outlook.

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