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NPL specialists beware: Greece is not Italy

Distressed buyers could face a labour of Hercules in establishing projected recoveries for Greece’s new NPL securitization scheme.


At the end of January, Greece inked its longest trade since 2009, a €2.5 billion 15-year syndicated deal led by Bank of America, Barclays, BNP Paribas, Goldman Sachs, HSBC and JPMorgan. 

The deal is the sovereign’s largest since 2014, and attracted an order book of €18.8 billion while offering a yield of less than 2%.

This remarkable reception, thanks in no small part to Europe’s anaemic interest rate environment, is also further evidence of Greece’s capital market rehabilitation – last October the sovereign even issued short-term debt at a negative yield. 

But a key hurdle still lies ahead: dealing with the stock of non-performing loans at the Greek banks before new EU regulations on minimum coverage for NPL exposures come into force in 2021.

The launch by the Greek government of an asset-protection scheme to deal with the country’s NPL problem – based on the successful Italian GACS (Garanzia sulla Cartolarizzazione delle Sofferenze) model – late last year marks an important step forward in this process. 

The labours of Hercules

The scheme, called The Hercules Asset Protection Scheme (HAPS), will enable banks to transfer their NPL exposures to a special purpose vehicle, which will subsequently securitize them. 

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