Greece

Greece’s National Bank (NBG) has hired Morgan Stanley as an adviser ahead of a planned sale of more than 6.0 billion euros ($6.73 billion) of non-performing credit, part of its balance sheet clean-up efforts, bankers close to the transaction said on Tuesday, Reuters reported. NBG, Greece’s second-largest lender by assets, is aiming to begin talks with potential investors about offloading a portfolio of soured loans known as project Frontier in the second half of the year, they added.

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The economic pain for Greece may be similar to other southern European nations. The European Commission forecasts that Greek national income will shrink by 9.7% this year, compared with 9.5% in Italy and 9.4% in Spain, Bloomberg News reported in a commentary. The country is, however, expected to rebound more sharply in 2021, by 7.9%, compared with an expectation of 6.5% growth for Italy and 7% for Spain. Greece’s initial contraction — set to be the largest in the EU — is happening because the economy relies heavily on tourism. As foreigners stay at home, hotels and restaurants suffer.

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Some hedge funds that bet against a series of Greek and Italian companies are nursing losses after the European Union’s breakthrough plan for a 750 billion euro (£673 billion) recovery fund sent stock markets surging across southern Europe, Reuters reported. The funds, which include Citadel, Marshall Wace and AKO Capital, still hold short positions on companies such as Italy’s Banco BPM and Greece’s Piraeus Bank ahead of a June 18-19 EU summit to debate the recovery fund, aimed at helping European economies recover from the impact of the coronavirus pandemic.

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Eurobank has moved ahead of Greek peers in the drive to cut bad loan volumes after completing a deal with Italian debt recovery firm doValue, and is now focused on boosting lending, its chief executive told Reuters on Tuesday. Greek banks have been making headway in their bid to sell, write off or restructure billions of euros of soured loans accumulated during the last financial crisis, Reuters reported. The high level of non-performing exposures (NPEs) - about 40% of their loanbooks in March - constrains their ability to finance the country’s economic recovery.

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Piraeus Bank, Greece’s largest lender by assets, on Monday reported a first-quarter loss after “frontloading” loan impairment provisions to take into account the impact of the coronavirus crisis, Reuters reported. Piraeus Bank, which is 26.2% owned by the country’s HFSF bank rescue fund, reported a net loss of 232 million euros ($258.08 million) compared with a net profit of 14 million euros in the same period a year earlier.

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Greek lawmakers approved a restructuring plan for Larco late on Wednesday which Greece called a last attempt to save Europe’s biggest nickel producer, Reuters reported. The European Commission said in November it was taking Greece to the European Court of Justice (ECJ) over its failure to recover 135.8 million euros ($147.63 million) of illegal state aid to Larco which is struggling under heavy debt.

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Greece’s spectacular bond rally reached another landmark on Wednesday as the country’s 10-year yield dropped below 1 per cent for the first time, the Financial Times reported. Greek borrowing costs have tumbled to record lows this year in defiance of its “junk” credit rating, as investors pile into corners of the eurozone debt market that offer a positive yield. The recent drop in borrowing costs caps a dramatic turnround since the height of the eurozone debt crisis when the country’s 10-year yield spiked above 30 per cent, effectively locking it out of the market.

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Fitch Ratings raised Greece’s sovereign credit rating by one notch, paving the way for the government to sell more debt in the coming days, Bloomberg News reported. The Mediterranean country’s long-term foreign currency debt was upgraded to BB with a positive outlook from BB-. While Greece hasn’t enjoyed such a high rating by Fitch since the country entered the bailout era in 2010, it’s still two levels below investment grade, highlighting that the Greek government has to do more so as to secure an exit from junk status.

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After almost a decade, the world’s lender of last resort is ready to leave Greece for good, Bloomberg News reported. For a while there, Europe’s most indebted nation had everyone worried this Mediterranean holiday destination was going to bring on the collapse of the euro. Its ups and downs had the market gyrating. Then came the biggest bailout in global financial history. The International Monetary Fund led the effort to save Greece from itself. At the beginning of the 10-year crisis in Greece, the Washington-based institution had asked for a restructuring of country’s debt.

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After a decade-long debt crisis that made Greece a bond-market pariah, the country now enjoys the luxury of having no financing needs for 2020. Yet the government’s 2020 budget shows it still plans to sell new debt, Bloomberg News reported. Despite a cash buffer of some 32 billion euros ($35.6 billion) left over from the country’s bailout program, Greece wants to maintain the good momentum of 2019 after yields hit record low levels in October.

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