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Sovereign ABS: Greece puts together tax deal

Despite previously criticizing ABS, the new regime can't ignore benefits

George Alogoskoufis:
securitizing taxes

Greece is planning to securitize delinquent tax receivables this year and next as it seeks to reduce its budget deficit below the 3% threshold specified in the Stability and Growth Pact in 2006. A source close to the deal says that a €11 billion pool of delinquent taxes could back the transaction.

Greek finance minister George Alogoskoufis has confirmed that the government intends to raise some €3 billion to €3.5 billion in two tranches, one this year and another in 2006, by securitizing past delinquent taxes. Although there is no official announcement yet, Citigroup, which managed a similar transaction in Portugal, is believed by market participants to have received the mandate.

The conservatives, in power since March 2004, had criticized their socialist predecessors for resorting to securitization several years earlier as they sought to meet the Stability and Growth Pact in order to enter the euro zone. However, government officials now argue that there is a big difference between securitizing delinquent tax arrears and securitizing future revenues from various assets.

In 2002 Eurostat introduced new regulations that ruled illegal those early securitizations and various other controversial transac

tions from Greece and other European countries.

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