The Greek Bond Market in 2007

The Greek Bond Market in 2007 15 YEAR BENCHMARK ISSUE MAY 2007 MARKET ANALYSIS +30 210 326 2070, marketanalysis@alpha.gr Financial Markets Group Planning Department Please refer to important Disclaimer on the last page of the presentation

Contents GREEK ECONOMY Greek economy Sovereign Credit Rating THE GREEK BOND MARKET Primary bond market Secondary bond market Greece vs Eurozone 15YR Hellenic Republic benchmark appeal

GREEK ECONOMY

4 Greek economy Greek GDP has been expanding since 1994. The longest period of continuous economic growth after the 1970s. The strong economic growth rates are maintained despite their marginal slowdown. Government deficit below the reference level the treaty of Maastricht imposes (3% GDP). Rates of decrease of government debt are considered to be among Eurozone s highest. Unemployment rate declined lower than 9% in 2006. European Commission asked (16/05) for lifting of the European Union`s excessive deficit procedure. Main priorities for 2007 are the reduction of government debt, further decrease of fiscal deficit, increase of employment, improvement of competitiveness and reinforcement of investments. 2003 2004 2005 2006 2007* 2007** 2008** GDP growth rate (stable prices) 4.8% 4.7% 3.7% 4.3% 3.9% 3.7% 3.7% Inflation (HICP- average levels) 3.5% 3.0% 3.5% 3.3% 3.0% 3.2% 3.1% General Government Deficit %GDP 6.1% 7.9% 5.5% 2.6% 2.4% 2.4% 2.7% General Government Debt %GDP 107.8% 108.5% 107.5% 104.6% 100.4% 100.9% 97.6% Unemployment 9.7% 10.5% 9.9% 8.9% 8.2% 8.9% 8.6% Source: ** European Commission *MoF Budget 2007

5 Greek economy Gross Domestic Product, Growth Rate % Greece-Eurozone Private consumption consists the most important determinant of economic growth. However, interest rates increase combined with the controlling wage increases decelerate its growth rate. 6,0 5,0 4,0 4.8 4.7 3.7 4.3 3.7 3.7 Public consumption is expected to show considerable decrease whereas public investments are estimated to continue increasing at high pace (8% in 2007). % 3,0 2,0 1,0 0,0 2.7 2.6 2.5 1.9 1.4 0.8 2003 2004 2005 2006 2007* 2008* Strong global economic growth (5.3%) in 2006 benefited Greece s export potential. Mild slowdown of global economic growth (4.9%) in 2007 is expected to influence negatively Eurozone s countries. Eurozone Greece European Commission forecasts growth rate will decline to 3.7% in 2007 and 2008 from 4.3% in 2006. Source: European Commission *Forecast MoF anticipates economic growth of 3.9% and 4.0% in 2007 and 2008 respectively. Possibility of a one-off increase of GDP up to 25% subject to Eurostat approval.

6 Greek economy Inflation 5,5 Greek-EU HICP Inflation gap Greek HICP Inflation Stronger GDP growth and economy s competitiveness inefficiencies retain Greece- Eurozone inflation gap. 4,5 3,5 Greece inflation rate at 3.3% vs Eurozone inflation at 2.2% in 2006. % 2,5 1,5 0,5-0,5 Greece s inflation differential over Eurozone average in the January to April 2007 declined to 0.8% from 1% over the comparable 2006 period. Average HICP inflation in Greece in the January to April 2007 period decreased to 2.8% compared to 3.3% in the same period of 2006 due to decline in energy prices. 1/00 7/00 1/01 7/01 1/02 7/02 1/03 7/03 Source: Eurostat, Markets Analysis Section 1/04 7/04 1/05 7/05 1/06 7/06 1/07 European Commission forecasts inflation rate will decline to 3.2% and 3.1% in 2007 and 2008 respectively from 3.3% in 2006.

7 Greek economy Fiscal Developments GDP growth rate, Budget Defiicit % GDP 5% 3% 1% -1% -3% -5% -7% 2002 2003 2004 2005 2006 2007* 114 112 110 108 106 104 102 100 General Government Debt %GDP Greece s budget deficit declined to 2.6% of GDP in 2006 from 5.5% in 2005. MoF forecasts general government deficit to decline to 2.4% of GDP in 2007 and to shrink further to 1.8% and 1.2% in 2008 and 2009 respectively. According to Greek government s 2007 budget, general government deficit will decline to 2.4% due to increase in receipts from indirect taxes and social contributions as well as decrease of expenses. Greek government targets balanced budget until 2010. GDP growth rate Government Debt % GDP Budget Deficit %GDP General government debt (% of GDP) is expected to fall to 100.4% in 2007 from 104.6% in 2006. The reduction of government debt (% GDP) is estimated to 8% for the 2004-07 period. Source: Ministry of Finance *Forecast

8 Greek economy General Government Balance 2004 2005 2006 2007* 2008* AUSTRIA -1.2-1.6-1.1-0.9-0.8 BELGIUM 0.0-2.3 0.2-0.1-0.2 FINLAND 2.3 2.7 3.9 3.7 3.6 FRANCE -3.6-3.0-2.5-2.4-1.9 GERMANY -3.7-3.2-1.7-0.6-0.3 GREECE -7.9-5.5-2.6-2.4-2.7 IRELAND 1.4 1.0 2.9 1.5 1.0 ITALY -3.5-4.2-4.4-2.1-2.2 LUXEMBURG -1.2-0.3 0.1 0.4 0.6 NETHERLANDS -1.8-0.3 0.6-0.7 0.0 PORTUGAL -3.3-6.1-3.9-3.5-3.2 SLOVENIA -2.3-1.5-1.4-1.5-1.5 SPAIN -0.2 1.1 1.8 1.4 1.2 EU-13-2.8-2.5-1.6-1.0-0.8 Eurozone budget deficit is expected to fall in 2007 to 1% from 1.6% in 2006 and improve to 0.8% in 2008. Greece had the 3 rd highest budget deficit to GDP ratio in 2006 among Eurozone countries after Italy and Portugal. Greece brought its budget deficit down to 2.6% of GDP in 2006, below the EU s 3% cap. According to EU s forecasts Hellenic Republic budget deficit will decline to 2.4% in 2007 and will slightly increase to 2.7% in 2008. General Government Balance % GDP Source: European Commission, May 2007 * Forecast

9 Greek economy General Government Debt 2004 2005 2006 2007* 2008* AUSTRIA 63.9 63.5 62.2 60.6 59.2 BELGIUM 94.3 93.2 89.1 85.6 82.6 FINLAND 44.1 41.4 39.1 37.0 35.2 FRANCE 64.3 66.2 63.9 62.9 61.9 GERMANY 65.7 67.9 67.9 65.4 63.6 GREECE 108.5 107.5 104.6 100.9 97.6 IRELAND 29.7 27.4 24.9 23.0 21.7 ITALY 103.8 106.2 106.8 105.0 103.1 LUXEMBURG 6.6 6.1 6.8 6.7 6.0 NETHERLANDS 52.6 52.7 48.7 47.7 45.9 PORTUGAL 58.2 63.6 64.7 65.4 65.8 SLOVENIA 29.5 28.4 27.8 27.5 27.2 SPAIN 46.2 43.2 39.9 37.0 34.6 EU-13 69.7 70.5 69.0 66.9 65.0 General Government Debt %GDP General government debt in Eurozone is expected to decrease to 66.9% and 65% of GDP in 2007 and 2008 respectively, from 69% of GDP in 2006. Greece had the 2 nd highest debt to GDP ratio in Eurozone following Italy in 2006. According to EU s forecasts, Hellenic Republic general government debt will decrease to 100.9% of GDP in 2007 from 104.6% in 2006 whereas it will decline (97.6%) below 100% in 2008. Source: European Commission, May 2007 * Forecast

Greek economy Sovereign Credit Rating Aa3 AA- A1 A+ A2 A Moody's A3 Baa1 GREECE Foreign Currency LT Debt A- BBB+ S&P, Fitch Baa2 S&P Fitch Moody s Α Α Α1 Outlook: Stable Positive Positive BBB Baa3 BBB- 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Moody's S & P Fitch Μoody s and Fitch upgraded Greece s rating outlook to Positive from Stable in January and March 2007 respectively. Greece s sovereign credit status remained unchanged in 2005 and 2006. 10

11 Greek economy Sovereign Rating Potential Fitch rating agency upgraded country s credit outlook (3/2007) to Positive from Stable, reflecting recent improvements in the public finances, growing fiscal credibility of the government and the expectation of large positive revisions to the level of GDP. S&P rating agency affirmed country s rating (3/2007) and noted that the Greek government continues to adhere to a program of gradual fiscal consolidation, having reduced the general government deficit to less than 3.0% of GDP in 2006. S&P emphasized that this consolidation will be unsustainable over the longer term without an increased focus on primary expenditure discipline. Moody s rating agency upgraded country s credit outlook (1/2007) to Positive from Stable, reflecting strong growth, ongoing slow decline in the country s public debt ratios and fiscal consolidation. In its annual assessment (3/2007) Moody s noted that Greece has made impressive progress towards convergence with the countries of the Eurozone while the budget deficit is decreasing as the government has been successfully controlling expenditures and increasing tax collection. Moody s rating agency retained country s credit rating (12/2004) to A1 due to historical high rate of GDP growth and EU membership but expressed its concern over high debt level and long term growth potential. Credit rating agencies S&P (11/2004) and Fitch (12/2004) downgraded Greece s sovereign rating in the end of 2004 by one notch to A from A+. Sovereign creditworthiness deterioration is attributed to budget deficit and government debt level upward revision for the period 1997-2003. Fiscal consolidation and implementation of structural reforms consist the most important factors that will determine country s credit outlook in the medium and long term.

THE GREEK BOND MARKET

13 25 20 15 10 5 Primary Debt Market Euro bn Government Debt Maturity Profile Debt in Euro Non Euro Debt The heaviest burden of outstanding government debt (approximately 77%) lies in the period 2007-2017. Government debt denominated in euro consists 99.1% of the total (12/2006) compared to 98.7% and 98.8% in 2005 and 2004 respectively. Bonds represent 82.3% of total debt in 2006 from 81.7% and 79.1% in 2005 and 2004 accordingly. Fixed coupon bonds stand for 81.6% (78.7% in 2005) vs 18.4% (21.3% in 2005) for FRNs. Non euro denominated debt accounts for 0.9% of total outstanding debt in 2006 from 1.3% in 2005, 1.2% in 2004 and 1.9% in 2003. 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2039 2040 2045 2057 Source: MoF, Bloomberg Interest payment of government debt show a decreasing tendency as a % of GDP falling to 4.7% in 2007 and 4.9% in 2006 from 5.4% in 2005 and 5.6% in 2004.

14 Primary Debt Market Central Government Debt 12/2006 by currency Issuance composition, 1-12/2006 Fixed rate bonds 84.20% T-Bills 7.00% Euro 99.1% (12/2005: 98.7%) Non Euro 0.9% (CHF:74.3%, USD: 17.5%, JPY: 2.8%, GBP: 5.4%) Inflation linked 7.00% FRNs 1.80% Remaining Maturity of Central Government Debt (10/2006) Euro denominated debt composition (%), 12/2004-12/2006 > 5 years 47.1% 100 81.7 82.3 82.1 Dec-06 Dec-05 Dec-04 80 1-5 years, 43.5% < 1 year, 9.4% 60 40 20 0 Bonds 0.5 T-Bills 0.7 0.5 13.8 13.6 Other Debt 13.8 3.6 Bank of Greece 3.8 3.6 Dec-04 Dec-05 Dec-06 Source: MoF, Bloomberg, PDMA, ALPHA BANK - Markets Analysis Section

15 Primary Debt Market 40 35 30 Euro bn Primary Market Issuance*, 2002-2007 HELLENIC REPUBLIC MONTHLY DEBT ISSUANCE, 1-5/2007 7000 T-BILLS 6000 FIXED COUPON ISSUES 5000 OTHER ISSUES 25 20 EUR MLN. 4000 15 3000 10 2000 5 1000 0 0 2002 2003 2004 2005 2006 2007 Q1 Q2 Q3 Q4 1/06 2/06 3/06 Source: Bank of Greece, ALPHA BANK - Market Analysis Section (5/2007) *T-Bills & Bonds 4/06 5/06 Issuance activity focused in the first half of the year due to refinancing and budget deficit cover needs. Government debt issuance in the first half of the year approaches 75% of total borrowing. Weighted average maturity of government securities for the period January to December 2006 increased to 10.47 years compared to 10.46 years in 2005 and 6.85 years in 2004. Bid to cover ratio in Greek government bond issues in 2006 increased to 4.89 times compared to 4 times in 2005 and 2.97 times in 2004. The equivalent ratio for the majority of Eurozone countries lies between 1.2-1.5 times. In 2007 b/c ratio remains on average above 4 times.

Primary Bond Market Domestic Borrowing Composition 14000 12000 10000 8000 PRIMARY MARKET ISSUANCE STRUCTURE - BY TENOR 2003 ( 32.2 bln) 2004 ( 31.6 bln) 2005 ( 37.1 bln) 2006( 28.4 bln) 1-5/2007( 17.6 bln) Hellenic Republic borrowing totaled 31 bn in 2006 from 38 bn in 2005 and 43 bn in 2004. Primary market issuance amounted to 28 bn in 2006 from 37 bn in 2005. 6000 4000 2000 EUR MLN. HELLENIC REPUBLIC BORROWING IN 2007 (1-5), BY MATURITY 0 3M 6M 12M 3Y 5Y 7Y 10Y 10-20Y 20Y> Source: ALPHA BANK - Markets Analysis Section (05/2007) Hellenic Republic borrowing in 2007 is expected to approach 35 bn from 31 bn in 2006 due to higher refinancing needs. 15-30 YR 18.7% 30 YR 21.4% 50 YR 5.3% 13 WKS 1.8% 26 WKS 1.0% 52 WKS 1.1% In January to May 2007 period Hellenic Republic has raised 18.7 bn through primary market and private placements. 10YR 37.9% 5 YR 12.7% 16

17 Secondary debt market Hellenic Republic Yield Curve Evolution 5.0 4.8 4.6 4.4 4.2 % 4.0 3.8 3.6 3.4 3.2 3.0 12/30/2006 6/30/2006 5/16/2007 6M 1 Y 3 Y 5 Y 7 Y 10 Y 15 Y 30 Y Source: Bloomberg, ALPHA BANK - Market Analysis Section Expectations that ECB will insist on its tightening policy increased yields in the short and medium term part of the yield curve. Bond prices pressure in the long end of the curve was milder due to strong institutional investors demand and prospects for subdued inflation in the long term.

18 Secondary debt market Liquidity EUR BLN 140 120 100 80 60 40 HDAT Trading Value, 2003-2007 2003 2004 2005 2006 2007 Average monthly transactions value in the electronic secondary securities market (HDAT) in the period Jan-April 2007 reached 57.8 bn compared to 52.7 bn in 1-4/2006 and 60.8 bn in 1-4/2005. HDAT consists one of the most liquid markets in the EU with favorable repercussions on the attractiveness of Greek government bonds. 22 Primary dealers participate in HDAT in 2007 (22 in 2006, 21 in 2005), while 17 of them are foreign owned financial institutions. 20 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Source: PDMA ALPHA BANK, Market Analysis Section Dec Trading volume in Q1 2007 focused on long term bonds (> 10 years) and accounted for 45% of trades. The new 10Y benchmark (4.30% 2017) recorded the highest trading volume (31.5%) followed by previous (2016 and 2015) 10Y issues.

19 Secondary debt market 12 10 Liquidity 26 Greek government bond issues are traded in April 2007 on EuroMTS and on HDAT. EuroMTS trading platform completes and enhances GGBs liquidity. Issues amount (Euro bn) 8 6 4 2 0 3.25% 6/2007 3.50% 4/2008 2.90% 6/2008 6.3% 1/2009 3.50% 4/2009 3.40% 6/2009 3.10% 4/2010 6% 5/2010 5.35% 5/2011 3.90% 8/2011 5.25% 5/2012 4.60% 5/2013 4.50 5/2014 3.70% 7/2015 3.60% 8/2016 4.30% 7/2017 6.5% 10/2019 5.9% 10/2022 2.90% 7/2025 4.50% 9/2037 29.5% of trading activity in the primary market and 41.7% of trading activity in the secondary market HDAT (EuroMTS: 40.4%) during the period Jan-March 2007 covered by the 5 Greek banks. Greek government bonds average trading volume on EuroMTS in the 1st quarter of 2007 reached 8.2 bn relative to 9.4 bn in the same period in 2006. Source: PDMA ALPHA BANK, Market Analysis Section

20 Greece vs Eurozone Yield Curve Comparison: Greece vs Eurozone Yield to maturity % 4.9 4.8 4.7 4.6 4.5 4.4 4.3 4.2 Yields differential Greece Eurozone 50 40 30 20 10 Yields differential (bps) 4.1 4.0 2 Y 3 Y 5Y 7 Y 10 Y 15 Y 30 Y 0 Bloomberg, 16/5/2007 Longer dated part of the HR sovereign yield curve offer the richest spread over Eurozone yield curve.

21 Greece vs Eurozone 15 year sovereign benchmark yield spread evolution over France OAT January 2003 May 2007 40 35 GREECE IT ALY PORTUGAL 30 25 20 15 10 5 0-5 -10 1/03 5/03 10/03 2/04 7/04 12/04 4/05 9/05 1/06 6/06 11/06 3/07 Yield Spread (bps) Source: Bloomberg

22 Greece vs Eurozone 15 year European sovereign yield spread over mid swaps January 2004 May 2007 30 GRECE 5.9% 2022 ITALY 9% 2023 15 10 FRANCE 8.25% 2022 PORTUGAL 3.85% 2021 25 5 ITALY,GREECE 20 15 10 5 FRANCE, PORTUGAL 0-5 -10-15 -20 0-25 -5 1/04 5/04 10/04 2/05 7/05 12/05 4/06 9/06 1/07-30 -35 1/04 5/04 10/04 2/05 7/05 12/05 4/06 9/06 1/07 Source: Bloomberg

23 Greece vs Eurozone 15 year Asset Swap Spread & Sovereign Rating 6 4 2 ITALY 15yr sovereign swap spread (bps) 0-2 -4-6 -8-10 -12-14 -16-18 -20-22 -24 FRANCE AAA AA+ AA AA- A+ A PORTUGAL BELGIUM AUSTRIA NETHERLAND GERMANY GREECE Standard & Poor's Rating Scale Bloomberg, Reuters 17/5/2007

24 Greece vs Eurozone 15 year Asset Swap Spread & Sovereign Rating 6 15year sovereign swap spread (bps) 4 2 0-2 -4-6 -8-10 -12-14 -16-18 -20 AUSTRIA FRANCE NETHERLANDS BELGIUM ITALY Aaa Aa1 Aa2 Aa3 A1 PORTUGAL GREECE -22-24 GERMANY Moody's Rating Scale Bloomberg, Reuters 17/5/2007

25 Greece vs Eurozone Budget balance & Asset Swap Spread 6 4 2 ITALY 15year sovereign swap spread (bps) 0-2 -4-6 -8-10 -12-14 -16 PORTUGAL GREECE -18 BELGIUM FRANCE -20-22 AUSTRIA NETHERLANDS -24 GERMANY -4-3.5-3 -2.5-2 -1.5-1 -0.5 0 European Commission forecasts Bloomberg-Reuters data, 17/5/2007 General Government Balance % GDP, 2007

26 Greece vs Eurozone Public Debt & Asset Swap Spread 5 2 ITALY 15 year sovereign swap spread (bps) -1-4 -7-10 -13-16 -19 AYSTRIAFRANCE PORTUGAL GREECE BELGIUM -22 NETHERLAND GERMANY -25 0 20 40 60 80 100 120 General Government Gross Debt % GDP, 2007 European Commission forecasts Bloomberg-Reuters data, 17/5/2007

27 15 year Hellenic Republic benchmark appeal 15 year Hellenic Republic benchmark yield spread over France OAT 40 Hellenic Republic sovereign bonds offer the highest yield over Eurozone comparables. Yield Spread (bps) 35 30 25 20 Longer dated Hellenic Republic bonds offer the richest spread over Eurozone yield curve. 15 10 1/05 5/05 10/05 3/06 7/06 12/06 4/07 Strong GDP growth along with ameliorating fiscal and public debt profile signal potential sovereign credit status strengthening. Improving sovereign credit rating potential allows for further GGBs spread narrowing over Eurozone benchmarks. Source: Bloomberg

Contacts Financial Markets Trading Manos Arzinos Natassa Niniou Sovereign (EU) Debt Kostas Lebessis Despina Gouvali Sovereign (Non-EU) & Corporate Debt Kiki Karayianni Eleni Koukoutsidou George Palaiokrassas Sales Division Institutional Sales Nassos Pavlidis Kitsos Botsaris Irini Tsaida Market Analysis Panos Remoundos Maria Koutouzi Kostas Kamarinopoulos Stella Korkontzelou +30 210 326 4003, fmt@alpha.gr Division Manager Assistant Division Manager +30 210 326 2060, capitalmarkets@alpha.gr Senior Trading Manager Trading Manager +30 210 326 2060, capitalmarkets@alpha.gr Senior Trading Manager Trading Manager Asst. Trading Manager +30 210 326 2090, institutionalsales@alpha.gr Assistant Division Manager Senior Sales Manager Asst. Sales Manager +30 210 326 2070, marketanalysis@alpha.gr Senior Analysis Manager Analysis Manager Analysis Manager Asst. Analysis Manager

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