Rare is the Greek company that has not been deeply impacted by the country’s economic crisis. Slowly but surely, highly diversified firms’ ratings have been ratcheted down simply because they are headquartered in Greece and listed on Greek exchanges, making the cost of funding their operations prohibitively expensive. This week, bottling company Coca-Cola Hellenic (CCH) and Greek yogurt maker FAGE each decided to pack up their headquarters and relocate outside Greece.
Both share a number of significant characteristics. While they have (and will keep) factories in the country, only about one-third of FAGE’s sales and 8% of CCH’s revenues come from Greece, according to Moody’s rating agency. Both companies have substantial cash flow. But the credit rating of each company has taken a deep hit since the euro crisis began, in large part because of their connection with the Greek sovereign. Fitch currently rates FAGE at a speculative-grade “B” and CCH at a healthier, but troublesome investment-grade “BBB+.”
FAGE will relocate its headquarters to Luxembourg and CCH will go to Switzerland, hoping to avoid the volatile storm of debt and politics brewing in Greece. After CCH made that decision earlier this week, Fitch quickly lauded the company’s move, saying today that it “could mitigate the impact of a euro exit[,]…reflect its international status and improve its access to capital markets.”
While that agency qualified that not all companies would benefit from such a move, we can’t help but guess that it’s a move other companies might try. In particular, Titan Cement Co. is the only remaining Greek private company with a higher rating than the Greek government aside from Hellenic Telecommunications Organization, according to S&P. Titan’s strong global presence may convince it that it would benefit from re-locating.
Either way, it’s worthwhile to note that some of Greece’s strongest companies appear to be getting out while the getting’s good.