‘Investors are seeing the efforts that Greece is undertaking’, says Attica

World Finance speaks to Attica Wealth Management about Greece’s return to prominence

November 20, 2014

After four years of exile from market borrowing, Greece is back with a vengeance, but is the real economy discouraging investor sentiment? Representatives from Attica Wealth Management, Theodore Krintas and Dimitra Vassilakopoulou, shed light on the financial situation in their country.

World Finance: Dimitra, do you think Greece was even ready to enter into the bond market?
Dimitra Vassilakopoulou: Oh yes, I believe so, definitely. You see, Greece had to convince the financial community that it had managed to overcome one of the deepest and hardest crises in history, losing almost 25 percent of GDP. So great achievement like primary surplus and current account surplus had to be sealed by the market’s recognition.

Also, the timing proved to be very right. As the issuance over subscription was impressive, and the yield came out at very decent spread levels. We have to understand that this issuance put Greece again, after four years of absence, in the market’s map.

World Finance: Very interesting. Greece’s really high returns in a period of ultra-low interest rates must have shored up investor confidence, or did it?
Theodore Krintas: Absolutely, we are in a period where all investors all over the world are hunting for yields. Now offering a higher yield, an extra yield, being a country in Europe after all this effort, that Greece remains in the European Union, it is very important.

The problem of a high debt level remains, and we have to face it

But there is also another part that is important to state here. The fact that investors are seeing the efforts that Greece itself is undertaking, and I understand that this is going to be elaborating more and more in the months to come.

World Finance: Now some of the systemic issues still riddling Greece, of course, very high debt levels. We’re looking at numbers of over €300bn. Tell me, what does that do in terms of negating the impetus or momentum that you’ve been able to build in the bond markets?
Dimitra Vassilakopoulou: The problem of a high debt level remains, and we have to face it, but it does not consist a threat at the moment, so we have to realise that 85 percent of our debt is in the hands of our European partners, the ECB and the IMF. So the rate, the average rate of our debt is very low, it’s lower than 2.5 percent, and the duration profile is very favourable.

So what we have to do is not to lose all of our energy on that. We should focus on reforms and on exploring our competitive advantages, which could be agriculture, tourism and shipping, in oder to restart our economy and to pay off all of our debt.

World Finance: Now you’ve just talked about some of the investor confidence. The Greek government has in some ways denied the scale of this crisis. How does that hit at investor confidence both individually and locally?
Theodore Krintas: In a huge way, I’m afraid. It has been a very long time with Greek politicians representing the situation in a different way than it was, so finally the investors lost the confidence in the country. That hit the country even more during a very difficult period.

I have to say that this has already changed. Actually, it is my belief that Greece has changed already, and the fact that we’re seeing some remaining, they’re remaining on the same path, is because it has been there for the past 30 years or so. I understand that the European partners along with the IMF are helping the country to understand what should be the next steps.

The populations has also believed, decided, that it would take on the next steps, and for sure Greek statistics are not on the table any more.

World Finance: Now in order to continue with the growth that you’d like to see happen, what sort of regulatory changes do you want to see the government enact as soon as possible?
Theodore Krintas: There are a couple of very important steps that the government has to take, the sooner the better. It is very important, for example, to create a stable tax, an economic environment for the country for the next five to ten years. Stability is very important in order to attract foreign direct investments, and Greece is in big need of foreign direct investments for the simple reason that the money that exists in Greece is not enough in order to restart the economy quickly. So the first step, focus on tax and economic stability.

The second step, focus on helping enterprises to start up and grow. Greek and international enterprises. I think if those two things happen sooner, the economy will grow very quickly.

Greece has paid the price for all this behaviour

World Finance: Now in order to achieve some of the changes that Theodore just mentioned of course, you still want to have as much of a stable environment as possible, but as we all know, there has been tension, there have been protests in the nation’s capital, bombings even. How have those impacted the market?
Dimitra Vassilakopoulou: Greece has paid the price for all this behaviour, and for all its weaknesses, and especially its political instability. Things have changed dramatically, have improved dramatically. During the last two years, Greeks have finally realised that, without great sacrifices and hard work, their future looks gloomy. So extremists were pushed out to the fringes of the society, and we have managed this year, Athens tourism to become one of the best seasons this summer since the Olympic Games of 2004.

Even the opposition has become much more realistic, as everybody now realises that the strict European framework leaves no other alternative but to proceed with the necessary restructuring of our economy.

World Finance: OK, very positive to hear. Now I want to hear from you Theodore, do you think that Greece’s entering into the bond market is a signal that the European community has officially entered out of the debt crisis?
Theodore Krintas: It is a very positive signal, that is for sure, but we still know and we still understand that in Europe we have a lot of steps to take in order to get into a new growing era. So we are not in a crisis mode still. This is our belief. But there are still more steps to take, and I understand that the first step by Greece is entering the Euro market, the bond markets, was a positive. But we need more and more to come.

I hope that with leadership and vision over the European Union, that will grow for the prosperity of the people and the world in all, will come and will be the base of our future.

World Finance: Very exciting indeed. Good luck ahead to Greece. Theodore, Dimitra, thank you so much for joining me today.
Both: Thank you.