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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. 

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