Frantic to find a way to cover a looming $11-$14 billion hole in its budget next year, the Greek government reportedly is considering using its state properties as collateral to sell bonds as a way to raise critical revenues.
Finance Minister Yannis Stournaras, who has predicted a return to markets and beginning of a recovery next year, is anxious to avoid Greece having to ask for a third bailout because that would likely come with more of the same kind of crushing austerity measures Prime Minister Antonis Samaras promised he would never ever again impose no matter what.
While Greece is already having trouble finding buyers for its state enterprises, even at bargain basement prices, it has dragged its feet as well on selling state properties, which now would be used as backing for loans through a so-called Special Purpose Vehicle (SPV) that would come under both Greek and European management with the government, despite vowing not to do so, allowing outside interests to gain a foothold in managing part of the country’s economy.
The SPV would issue bonds backed by the property assets that could then be used as collateral for further loans from the European Stability Mechanism. It is thought this would make it easier for Eurozone parliaments to approve the release of more loans to Greece and in some cases might mean Parliamentary approval is not needed at all.
The other option is to allow investors to buy shares in the SPV, with part of the money going toward covering the funding gap. This option has the advantage of not adding to Greece’s large public debt and is considered a little easier to manage politically. However, it is not certain that the SPV would be able to attract investors.
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