The Greek government has been won over to the joys - and off-balance sheet treatment - of securitization in a big way, with several deals in the pipeline.

First in the queue is IKA, the state social security agency, which announced last week that a consortium made up of Paribas, Citibank and the National Bank of Greece will advise on a securitization backed by overdue social security payments (ASRI 2/28/2000, p.2).

Miltiadis Nektarios, governor of IKA, said if the initial process "evolves according to our plans, the bond issue should be ready by late summer." Sometime in the summer there will be a further bidding process for the underwriting mandate, he added.

It is not yet clear whether IKA is being optimistic over the timing of the deal, which a Paribas official said would be in the region of e2 billion ($1.9 billion). The Greek government is working on a securitization law and it is uncertain whether this needs to be in place before IKA can proceed with its plans. "It's too early to say at this moment," said the official. "Deals had been arranged in Italy before a securitization law had been implemented, so we'll have to wait and see if the same goes for Greece."

Nektarios said that the securitization has a number of benefits, beyond simply raising funds, in particular the bankruptcy remote nature of a securitization. "This deal would help us to reduce public sector funding requirements, by issuing debt not guaranteed by the state."

Also, Nektarios believes that the deal should help improve the internal management of the agency, as the success of this deal - and possibly deals in the future - will depend on how well it can recover delinquent payments.

"Securitization should improve the operational efficiency of a public agency," he said. "Not only does it put pressure on the debt recovery process, but also we are under pressure to perform [because we are responsible to] the rating agencies and investors."

Nektarios said the inspiration behind the project came from the INPS transaction in Italy.

Meanwhile, the finance ministry will soon name the consortium that will advise on a proposed securitization of future receivables from the state lottery (ASRI 1/17/2000 p.1). The deal, which is expected to be backed by 300 billion drachmas ($918 million) of revenues, will go towards lowering state debt and paying for the 2004 Athens Olympics.

Four consortia of banks are believed to be in the running for the advisory role, with Deutsche Bank, Paribas and Bank of America heading three bids, and Morgan Stanley Dean Witter, Salomon Smith Barney and Warburg Dillon Read making up the other.

The government is also examining three more securitizations this year. One deal would be backed by loans issued by a state-financed bank - which Paribas is also looking to arrange - another for the Ministry of Agriculture and a third seeking to raise funds for the protection of Greece's heritage.

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