Access to International Liquidity for Greece’s Corporates? Yes, it is possible!

by Sophie Papasavva, Partner at EMFC Loan Syndications LLP
February 2013


Gone are the days when Greece’s CFOs called their house banks asking for money and a cheque would promptly arrive in the post (or near enough). Gone are the days when borrowers shoved their bankers in a room and let them fight over ever-decreasing pricing and lead roles for multi-million euro syndications. Today’s borrowers benefit from no such goodwill as Greek banks have limited liquidity, even for their longest-standing clients. So how can Greece’s CFOs access liquidity in this environment?

This article argues that Greece’s exporting corporates should make themselves attractive, raise their hand and shout out loud to market themselves abroad. No bank is going to come knocking, so the corporate needs to go looking. The international loan markets are active; volumes in 2012 may have been lower than 2011, but banks are lending. And before you hastily argue: ‘but, we are in Greece...’ there are ways to mitigate that - lending is all about structure and price. So which Greek exporters can access international liquidity? How can their CFOs tap into this elusive pot of cash? Drawing on 14 years experience in the international loan markets, this author shares some thoughts.

Recent Successes

Dealogic reports US$783.2 billion of syndicated loans in EMEA during 2012. Eastern European borrowers raised US$60.9 billion; Central European borrowers raised US$4.2 billion. Whilst Southeast Europe is not reported separately, a quick search through Thomson Reuters reveals six ‘Greek’ syndicated loans since June:

ecent Successes

International lenders to Greek borrowers do exist: Arab Bank, Arab National, Barclays, BNP Paribas, Citi, Credit Suisse, Emirates, First Gulf, HSBC, ING, Japan Bank for International Cooperation, Mashreq, PPF Banka, Raiffeisen, Samba, Société Générale, Standard Chartered, United Bulgarian Bank. They may not be the usual suspects, but all are named lenders in one or more of the above syndications. Leaf Tobacco A. Michailides also tapped the international loan markets in 2012, but details are undisclosed; its bankers include Deutsche Bank and FBN (UK).

The loan product is a private instrument, seldom disclosed unless the borrower is listed, so this is not an exhaustive list. Still, conclusions may be drawn on why these borrowers succeeded. Their common elements are: significant business either generated abroad or exported; fixed assets (or long-term contracts) to offer as security; multi-million euro businesses. But, not all have internationally recognised brands. Not all are listed. Not all can access long-term (5-year) money. Not all required a foreign-domiciled borrower.

The overriding common element amongst them? They tried! They tried and they had the stamina to pursue structured loans with high probability of success. It couldn’t have been easy, but they certainly succeeded.

The Bare Minimum

High probability of success: is there a hidden formula behind this notion? Of course not. This article does not for one moment begin to argue that any Greek corporate can borrow international money. But it does argue that by ensuring certain key elements, corporates raise their ‘attractiveness’ to international lenders. Let us start with the bare minimum:

  • Stable or growing revenues
  • 3 years positive EBITDA
  • Strong financial ratios
  • Good banking history
  • Significant reliance on (growing) exports
  • English speaking CFO.

The first four requirements should be no surprise to any CFO. Unless there are solid revenues, positive EBITDA, reasonable gearing and leverage ratios and good borrowing track record, then a company is not bankable, even in the good times. Assuming these criteria are met, let’s move onto the next: exports.

Exporting companies are partially shielded from domestic realities of declining growth. Diversified revenue streams and recurring cash from (growing) international markets, point towards a business that is resilient, irrespective of the domestic situation. A significant proportion of revenues from abroad - ideally from several markets and under long-term contracts to solid clients, is key. If this is the starting point, then the rest becomes easier. By default, not all of Greece’s corporates are eligible, but there are definitely some.

Oh, and the CFO absolutely needs to speak English.

The Nice-To-Haves

In addition to the bare minimum requirements, there are certain ‘nice-to-haves’ to facilitate a positive credit decision:

  • Long-term client contracts
  • Fixed assets
  • International presence
  • Size.

Long-term client contracts for banks to take assignment over, are a great asset. One year renewing contracts are alright, but the longer-term the contract, the longer-term the loan. Clients abroad carry weight with banks in their own country, making it easier to tap into that bank market for funding. Why? Because a Greek producer contracted to sell (anything) to Makro UK can assign this contract to UK banks and borrow against it. UK banks are far more comfortable with long-term Makro UK risk than they are with any Greek corporate. Similarly, a tomato processing plant that has sold to Napolina for years may approach Italian banks, a soy processing plant that has long-term contracts with Bunge Poland could tap into Polish banks etc.

Greece seems to have developed a niche strength in the technology sector, with the majority of the world’s mobile marketing companies located here and many more involved in software and other ICT. With limited reliance on domestic revenues, despite not having fixed assets, the technology sector is understood by international banks and several of these companies could raise loans abroad. Many banks absolutely understand cashflow lending and have been offering such for decades, to many sectors. But fixed assets are always an advantage - a chain of retail premises, a factory, a quarry. Just a nice to have.

Another great asset is presence abroad and in anticipation that little value will be placed on any Greek parent guarantee, a subsidiary abroad needs to be creditworthy. Bank credit committees consider a variety of factors when making credit decisions, with country risk being key. Each country is assigned an internal risk rating that governs both lending appetite and the margin required to make adequate returns. Country ratings are integral to each and every bank risk-return model and no corporate, even the bluest of blue-chips can penetrate the country ceiling. Today, appetite for Greek country risk is either non-existent, or requires too high a margin. So a physical presence abroad allows a loan structure with a foreign-domiciled borrower, as in the case of Intralot, Archirodon etc. Having a borrower in a different jurisdiction, with cashflows generated abroad, ideally not touching Greece, means that banks can assign a different country risk rating. Even Albania country risk is likely better than Greece these days (although Cyprus is not).

Finally, size does matter. Take two companies in the solar power sector, both generating revenues from long-term international off-takers. Inevitably, one reporting €30m in revenues is more likely to attract foreign lenders, than one reporting €10m. It doesn’t mean the smaller company is automatically excluded, but when banks charge 2% or 3% or 4% of the loan in up-front fees and the work involved is exactly the same irrespective of loan size, inevitably, the larger deal will trump the smaller. To tackle a heavily structured, bespoke loan for a Greek corporate, banks need good fees. It is, what it is.

Structures That Work

A tried and tested structure, historically used to mitigate country risk, is the trade finance loan. Short-term in nature, so not applicable to all corporates, it is a structure used for soft commodity exports, metals, oil. It often involves an off-shore special purpose vehicle as borrower (seller), with buyers paying directly into the lenders’ collection account. If Africa is one of the largest trade finance markets for banks, why not Greece?

Project finance works for construction projects with concession agreements and long-term off-takers, eg. for renewables. Such loans rely heavily on the contracting party for the build, so a Chinese construction company building solar power plants in Greece can facilitate project financing in the form of deep-pocketed Chinese banks. Add a foreign off-taker and the project absolutely becomes bankable. This is done all across the emerging markets; why not in Greece?

Loans are all about structure and price; the former to partly mitigate risk and the latter to compensate adequately for the remaining risk. Even if a corporate does not export commodities, or if there is no construction project, there are still loans that fit. In these times it is worth exploring alternative legal structures - create a new holding company in the Netherlands and transfer into it all key contracts. Or, a manufacturing company with Balkan subsidiaries can ring-fence its more creditworthy assets to borrow using a bespoke structure:

Structures That Work

Finally, it is worth mentioning that international banks commonly use risk insurers, who, for a premium, insure exposure against a loan. Yes, of course the borrower pays for that premium, but the option is there for a CFO to consider. The most common mistake of Greek corporates today? They are not exploring enough options.

Corporates’ Responsibility

A crucial exercise that corporates should perform when seeking a loan in this environment, is to prepare before approaching the banks. From ensuring a ‘bankable’ set of projections, to seeking legal advice on structures, to a well-articulated Request for Proposal to banks - yet, these are steps most often omitted by CFOs. If corporates were better prepared for international lenders, perhaps tapping into those available pockets of liquidity might just be achievable. No promises and no certainties, but CFOs owe it to their shareholders to at least try.

Liquidity is available; not widely and not deep pockets of it, but it is certainly available. Greek corporates need better preparation and possibly expert guidance through bespoke structures that differ from plain term loans, but the experience and the appetite to assist is plentiful. Lawyers, loan advisors, tax advisors and specialist banking teams have all done this before - we are not re-inventing the wheel here. The question remains however: are Greece’s CFOs willing to venture into unchartered territory? More importantly: do Greece’s CFOs have the stamina to even try?


This article was submitted by the author in English; it was translated into Greek by the editorial team. To read the original, please visit:

Sophie Papasavva

Sophie Papasavva

Sophie Papasavva is the Founding Partner of EMFC Loan Syndications (“EMFC”), a boutique firm assisting companies seeking to raise bank debt. EMFC offers Loan Execution Support, acting as an additional ‘in-house’ resource to time-constrained finance teams. Prior to establishing EMFC, Sophie was a loans banker for 12 years, first as telecoms, media & technology relationship manager and later in loan syndications and sales, where she gained experience in multiple sectors such as oil & gas, mining, infrastructure, agribusiness and others. Sophie has originated, structured, executed, sold, restructured and syndicated loan financings ranging from simple bespoke bilaterals to complex multi-billion dollar, multi-currency syndicated transactions. Her expertise lies in arranging structured, bespoke financings for corporate borrowers operating in the emerging markets. To contact Sophie, please e-mail her directly at or follow her on Twitter at @Sophie_EMFC.