For most investors, Greece represents economic catastrophe and is seen as a good way to make money disappear. But the worst may be coming to an end in this mediterranean nation and investors could be ready to pour the money back into the Hellenic Republic.
Progress so farAlthough Greece still has unemployment figures north of 25%, meaningful progress is being made in other categories. In a recent article in The Guardian, Greece's finance minister, Yannis Stournaras, highlighted some of the examples.
- Current estimates predict positive economic growth for Greece in 2014
- 10 year Greek bond yields have dropped significantly to within 550 basis points of German debt
- Major Greek banks are successfully raising capital
- Unemployment appears to be stabilizing
- Government reforms are making Greece more competitive
- Net tourist receipts increased 18.1% for 2013 and exceeded targets
- Exports of goods and services rose 1.8% for 2013
Return of the money?For the past few years, raising money in Greece has been extremely difficult. In mid 2013, only three of the four major banks were able to raise even 10% of their capital needs from private investors and National Bank of Greece (NYSE: NBG ) just squeaked over the minimum requirement for private capital sourcing. At the same time, the Greek government itself was reliant upon loans from the troika to meet its own obligations.
The situation is very different today for both Greek companies and their government. To meet capital requirements, Piraeus Bank and Alpha Bank raised a combined 2.95 billion euros from private investors. National Bank of Greece needs to come up with 2.2 billion euros in additional capital but has already said it will not need to issue new common shares while naming asset sales as a potential way to raise capital. Even virtually nationalized Eurobank is attracting private investor interest where interest from private investors currently exceeds the bank's minimum capital requirement.
The Greek government could also begin to tap the private sector again. Recent reports suggest that the government is looking to return to the private markets in the next three months through the sale of a five year bond.
Source: The Motley Fool
