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Is Life Coming Back To Some Forgotten Crossover Names?

25 September 2018 by lberuti

PPCGA (Public Power Corporation) provides electricity services. It distributes electricity in Greece to residential, commercial and industrial customers. The company, which is 51% state-owned, had been forced to make provisions for overdue bills left unpaid in its austerity-hit country in recent years. The provisions dropped considerably after the utility hired an adviser to help it collect the arrears, and it helped PPCGA to report a smaller first-half loss this morning. Once a monopoly, the company also announced they had lost market share in the retail market under a bailout-mandated plan Greece adopted to open up the sector to competition. First half revenue decreased 6.8% to €2.2Bln. Most importantly to CDS traders, they clearly stated that they will be looking to come to the bond market. Once considered an entity that could be orphaned, the news repriced its 5-year risk premium substantially wider. The prospect of more and longer debt deliverable into CDS contracts send PPCGA’s 5-year risk premium 139bps wider at 388bps. There obviously can be life in some of the least traded Crossover names.