IKA, the state social security agency of Greece, will launch its much-anticipated first entry into the European securitization market in October, according to a BNP Paribas official.
The deal, which could be anywhere between E1 billion ($950 million) and E2 billion, was originally scheduled to take place by the end of the summer (ASRI 3/13/2000 p.2), but the arranging process has been delayed as the government put the final touches to its new securitization law.
BNP Paribas, who along with Citibank and the National Bank of Greece will lead manage the IKA deal, is also arranging a deal for the Savings & Loan Fund, the Greek government-owned specialized financial institution. The deal, also penciled in for October - though it may happen later in the year - will securitize loans that SLF makes to Greek municipalities and civil servants. The official said the SLF transaction would look to raise between E700 million and E900 million, and will target normal investors in euro-denominated secured bonds.
The Greek government has been active in promoting securitization techniques, since it saw the Italian state pensions agency, Istituto Nazionale della Previdenza Sociale (INPS), launch a massive E4.65 billion securitization of delinquent payments last December (ASRI 12/13/1999 p.9).
When IKA first announced details of its plans in March, Militiadis Nektarios, governor of IKA, said the government saw securitization as a good way of reducing its public sector funding requirements. Nektarios also thought it would improve the internal management of IKA, as the need to meet bondholder payments would require it to be more active in recovering late payments.
The Paribas official said that the bank and its Greek colleagues were now involved in discussions with the ratings agencies. He was quick to emphasize the importance of the growth in securitization in Italy, as a factor in Greece's willingness to embrace the market.
"There hasn't been too much activity so far in Greece: I know Bear Stearns tried to get things going three years ago, but it's only this year that the law was passed," he said. "Greece has very close ties to Italy and witnessed the strong appetite for securitization, and the active role the government played in that. Now the Greek government is getting involved with these large deals, and we hope the ball starts rolling from here."
In terms of deals coming out of the private sector, the official thought there could be some activity in the mortgage-backed market, and expected other major investment banks to increase their involvement in Greece as the market evolves.