State-owned real estate may cover funding gap

The possibility of using real estate owned by the Greek state as collateral for a new loan to cover its funding gap for next year and 2015 is being considered by the Finance Ministry, Kathimerini has learned.

Athens is looking for alternatives to agreeing a third bailout because of the reluctance of its eurozone partners to provide any more money and because the conditionality that would accompany any loans would be politically difficult for the government to accept.

As a result, one of the options being considered is a so-called special purpose vehicle (SPV), which would have both Greek and European management, to be created. It would issue bonds backed by the property assets.

These 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.