Greek stocks ended Friday’s evidently nervous session in positive territory

Greek stocks ended Friday’s evidently nervous session in positive territory, closing out an overall negative week with aggregate losses of 5.0%. Although banks headed higher (in mid-session National touched +29%, Alpha closed at +5.85%, Eurobank closed at +1.09%), sharp selling pressures persisted in selective non-financials (PPC -7.64%, Frigoglass -7.34%, Folli-Follie -6.19%, Mytilineos -5.04%). Among those that gained ground were Grivalia +1.84%, Athens Exchange +1.88%, Piraeus Port +3.65% and OPAP +2.11%. Volume spiked to EUR163mn, significantly higher vs the average EUR105mn traded earlier in the week. Today we believe the market will regain some confidence following the government’s agreement with the creditors over the weekend. 

 
Economy // Govt reached an agreement with creditors but a few technical issues remain open; 13 prior actions to be finalized by Tuesday or Wednesday so that the ESM may approve the EUR1bn disbursement on Friday

The Government reached an agreement with the creditors on Friday evening and the relevant piece of legislation was submitted to the Parliament on Saturday but a few technical issues have not been finalized so negotiations continued through the weekend. According to Kathimerini, the Govt wishes to wrap up the negotiations within the next couple of days so that the relevant legislation is passed by Tuesday or Wednesday at the latest and the ESM meet to give the green light for the disbursement of the EUR1bn sub-tranche by Friday. The same source suggests that pending matters relate to the electricity transmitter privatization and tax-related reforms. Assuming a smooth ending to the current negotiations, a new round of talks is expected to kick off in the second half of January, focusing on tax and pension reforms as well as new fiscal measures for the 2016-2018 period.

 Banks // NPL resolution framework agreed; consumer, mortgage and SME NPL sales to be restricted until Feb 2016

The final agreement between Greek authorities and international creditors with regards to the NPL resolution framework was finally agreed at the end of last week. The new framework aims to establish an active market for NPLs as it defines the terms of operation for specialized institutions that are planning to offer NPL management services or acquire problematic loans and which will be regulated by the Bank of Greece. These entities will also be subject to BoG’s code of conduct in order to ensure that borrowers will not be in worse position than before due to the transfer of loans. Based on the proposal, a problematic loan could be sold only after the bank has proposed some form of restructuring in order to make the loan performing, at least 12 months before the sale. Finally, it restricts the sale of consumer, mortgages (backed by primary residence) and SME NPLs until February 2016 although the aforementioned restriction will be re-examined by then.

 National Bank // Sale of private equity to be completed soon; sale of Astir Palace postponed once again; new shares commence trading today

According to euro2day.gr, the sale of the group's private equity is going to be completed soon with the preferred bidder being a private equity firm sponsored by Goldman Sachs and Deutsche Bank. The report suggests that the auction was completed a year ago but has been delayed due to NBG's internal issues. NBG private equity reported a NAV of EUR 350mn according to the same sources and AUM of EUR 470mn as of Q3 2015. The same report suggests that the procedure for the sale of the Astir Palace hotel has been postponed once again as the involved parties have not been able to find a solution following the rejection of the land development plan by the Greek authorities. Finally we remind that the group’s new shares from the capital increase will commence trading on the Athens Exchange today.

Piraeus Bank // Paulson&Co holds 9.1% of total share capital; Baupost falls below 5%

The group announced that on Dec 8 Paulson&Co held 9.1% of the total share count corresponding to 798.175.417  ordinary shares, including warrants corresponding to 1.214.567 rights if exercised. In addition, it was announced that the participation of the Baupost Group, through warrants (if exercised) has dropped to below 5%. We remind that according to the group's earlier announcement, the HFSF's participation has dropped to 26% from 67% previously, the second highest among systemic banks.


ASE // Changes in the composition of the ATHEX Indices

Following the completion of the bank recap process, the investability weight of Piraeus Bank in all ATHEX indices changes to 74%. The change will be effective as of Wednesday December 16th, 2015.

Economy // 3-month T-bill auction on Wednesday

Note that the PDMA is to auction a EUR1.0bn 3-month T-bill on Wednesday, December 16. The previous same term auction (EUR1.0mn) was conducted last week at a 2.70% yield. The issue was oversubscribed 1.30x and the PDMA had accepted a total of EUR1.3bn.