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November, 2000
Materials for Presentation
The International Investors’ View
Of Risks and Opportunities in Greek Financial Assets
Overview
 Greek Economy – An Overview
 Macroeconomic Development and Indicators
 Credit Ratings and Rating history of the Hellenic Republic
 Credit Developments and Implications
 Bond Markets
 Equity Markets
 Macro-economic risks
 Addressing the Changing Market Environments
Greek Economy – Overview of a positive development
 1999E GPD US$ 128.9b. (2000E US$ 123.5bn.)
GDP - Overview
 Real GDP Growth rate above EU average since
1996 – 3.5% in 1999
(1998)
8%
 Large public sector in the economy
 Steady economic improvements in recent years
27%
 Improving public deficit and tightened monetary
policy
 On-going low inflation - average of 2.6% in 1999
 Privatisation for leading Government
enterprises in progress
65%
 Convergence and integration in EMU well on
track
 Falling interest rates and improved credit profile
Agriculture
Industry
Source: CIA World Fact book 2000
Services
Greek Economy – Inflation Declined whilst Growth Increased
Real GDP Growth Rates
%
Inflation Rates
%
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
1995
1996
1997
1998
GDP Growth Rate
Source: National Bank of Greece; CSFB Research
1999
2000E
1995
1996
1997
1998
1999
2000E
CPI Inflation (% change end-of-period yoy)
Greek Economy – Unemployment and Interest Rates Are
Heading Down
Unemployment Rate
%
Interest Rates
%
11.5
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
11.0
10.5
10.0
9.5
9.0
8.5
8.0
1995
1996
1997
1998
Unemployment Rate
Source: National Bank of Greece; CSFB Research
1999
2000F
1995
1996
1997
1998
Three-month ATHIBOR
10-year Bond Yield
1999
Greek Economy – Deficit Control at Work
Government Deficit
%
EUR mil.
10.0
6000
8.0
5000
Current Account Deficit
4000
6.0
3000
4.0
2000
2.0
1000
0.0
0
1995
1996
1997
1998
1999
General Gov. Deficit / GDP (%)
Source: National Bank of Greece; CSFB Research
1995
1996
1997
1998
Current Account Deficit
1999
The Sovereign Credit Rating of Greece: Now Firmly Single-A
Moody’s
Standard &
Poor’s
Foreign Currency:
A2
Local Currency:
A2
Foreign Currency:
A-
Foreign Currency:
A-
Local Currency:
A-
Local Currency:
A-
Outlook:
Outlook:
“STABLE”
Fitch
“POSITIVE”
Outlook:
“STABLE”
Sovereign Rating History – LT Foreign Currency Debt
Aaa / AAA
Aa1 / AA+
Aa2 / AA
Aa3 / AAA1 / A+
Moody's
S&P
A2 / A
A3 / ABaa1 / BBB+
Baa2 / BBB
Baa3 / BBBBa1 / BB+
Ba2 / BB
Q1
Q1
Q1
Q1
Q1
Q1
Q1
Q1
Q1
1992 1993 1994 1995 1996 1997 1998 1999 2000
bM 98
ar
-9
A 8
pr
M 98
ay
Ju 98
n9
Ju 8
lA 98
ug
-9
Se 8
p9
O 8
ct
N 98
ov
D 98
ec
-9
Ja 8
nF e 99
bM 99
ar
-9
A 9
pr
M 99
ay
-9
Ju 9
n9
Ju 9
lA 99
ug
S e 99
p9
O 9
ct
-9
9
Fe
Credit Spread: Hellenic Republic $ Bond (2008) – US$ Swap
100
90
80
70
60
50
40
30
20
10
0
Hellenic Republic – Credit Development
 Country Risk has declined
 Greek Government has gained credibility
 Foreign currency credit “ceiling” has been upgraded to Aaa by Moody’s
 Convergence to EMU criteria is well on track
 Entry in Euro-zone likely to result in:
 Monetary Stability
 Low interest rates
 Reduced exchange rate risk
 Financial markets denominated in Euro’s
 Better level-playing field with other European countries
 For the international investor these macro-economic developments may relatively
increase the attraction of Greek investments
Greek Issuers are well Established in the Eurobond Markets
Bond Issuance by sector
Bank/
Finance
25%
US$ mil.
Energy
9%
6000
Media
0%
Food/Tob/
Hotel
0%
5000
Others
12%
4000
Govt/
Authority
54%
3000
Bond Issuance by rating
2000
BBB
1%
BBB+
11%
1000
0
1990
1992
1994
1996
1998
2000F
Source: Bondware
A56%
BB
0%
BB1%
Unrated
31%
Equity Markets – Market Capitalisation
GRD bn.
 Correction and slow-down in 2000
70,000
 Volatility in the Greek equity market
60,000
50,000

World-wide volatility in equity
markets
40,000

Volatility due to limited size and
liquidity

Volatility due to significant
concentration
30,000
20,000
10,000
 Consolidation in Banking sector
0
1990
1992
1994
1996
1998 Sep-00
 Large caps and telecom performance
has retained strong performance
Total of Listed Shares
Data Source: National Bank of Greece
/0
1
02 /19
/0 98
3
02 /199
/0
5 8
02 /199
/0
7/ 8
02 199
/0
8
9/
1
02
9
/1 98
1/
02 199
/0
1 8
02 /19
/0 99
3
02 /199
/0
5 9
02 /199
/0
7/ 9
02 199
/0
9
9/
1
02
9
/1 99
1/
02 199
/0
1 9
02 /20
/0 00
3
02 /200
/0
5/ 0
02 200
/0
7/ 0
02 200
/0
9/ 0
20
00
02
Equity Markets
European Equity Indices 1998-2000
500
450
400
350
300
250
ASE
MSCI Europe
200
FTSE-100
DAX
150
100
50
0
Source: Bloomberg. 02/01/1998=100
The Greek Stock Market – Concentration and Diversity
*15 Largest Companies by Market Capitalisation
Company
Sector
30/12/1999 04/10/2000
OTE
Telecomunication
6.1%
7.8%
National Bank of Greece
Banks
5.9%
7.4%
Eurobank-Ergasias
Banks
2.9%
5.2%
Alpha Credit Bank
Banks
4.0%
5.1%
Panafon
Telecomunication
3.5%
4.0%
Commercial Bank of Greece Banks
3.4%
3.5%
Intracom
Metal Industry
2.3%
2.9%
Hellenic Bottling
Food and Beverages
1.5%
2.5%
Bank of Piraeus
Banks
1.6%
2.4%
Hellenic Petroleum
Energy
1.9%
2.2%
Viohalco
Holding
1.7%
2.0%
Interamerican
Insurance
1.4%
1.6%
Lambrakis Publications
Publications
2.1%
1.4%
ETBA
Banks
0.0%
1.2%
Titan Cement
Building Materials
1.1%
1.2%
Total
39.4%
50.4%
Main Sectors in the
Economy:
Banks
27.7%
Telecom
12.6%
Metal industry 7.3%
Modernizing the Economy and Reducing Public Debt
through Privatizations
“Privatisation Programme well on
track”:
 Increased market volume
 Increased market liquidity
Company
Announced Privatization
programme
next 14 months
Hellenic Vehicle Industry
Athens Stock Exchange
Hellenic Aerospace
Olympic Airways
COSMOTE (subsidiary of OTE)
Hellenic Postal Service
Horse racing organization
Football Pools Organization
Thessaloniki Port Organization
Agricultural Bank of Greece
Greek Telecom (OTE)
Helexpo Trade Fair
Thessaloniki Water Company
Public Power Corporation
Pireus Port Organization
National Bank of Industrial Development
Strategic investor
Strategic investor
Strategic investor
Strategic investor
Privatization
Strategic investor
Assignment of management to private concerns
Floatation
Floatation
Floatation
Strategic investor
Floatation
Floatation
Floatation
Floatation
Floatation
Macroeconomic Risks – Investors’ viewpoint
Tight Financial and Monetary Policy likely to continue

High level of public debt will remain a constraint for years to come

EMU convergence well on track – but still incomplete

Unemployment still a major challenge
Further Slowdown of EU growth

GDP growth slows down by 0.7% for each 1% reduction in EU growth

Current Account deficit to GDP increases and neutralises the devaluation effect
Increase in import prices

Sustained high oil price may adversely affect economy

EUR/USD exchange rate affects GRD price of oil and commodities

Inflation increases by 0.20pp for every 1% increase in import prices
Data Source: National Bank of Greece
Addressing the Changing Market Environments
Move from EMI to MSCI in 2001 will impact the Greek business environment
 Analytical focus will move from country base to sector base
 Relevant peers will now be top performing worldwide corporates
Recommended approach for Greek companies:
 New beginning in communicating with investor community
 Increased transparency
 Improved financial reporting
Adoption of IAS in addition to Greek GAAP
 Improved Investor Relations capabilities
Communication
Corporate information readily available
> Value creation through analyst and investor “friendly” corporate
structures and communication policies