Greece to tap markets for 7-year debt

by Kerin Hope

Financial Times
January 29, 2018

Greece is to bring a seven-year bond to market in the next two weeks, in what would be its first debt-raising since its return to the capital markets last summer.

Greece aims to raise up to €3bn in seven-year paper, to be followed by a three-year bond and a 10-year bond in the coming months, according to a source familiar with the situation.

It had originally planned to come to the market earlier this month, but was delayed because the government still has to complete some final reforms before the EU signs off on its review of Greece’s third bailout, the source said.

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ECB Interventions in Distressed Sovereign Debt Markets: The Case of Greek Bonds

by Christoph Trebesch & Jeromin Zettelmeyer

Peterson Institute for International Economics
January 2018
Working Paper 18-1

The authors study central bank interventions in times of severe distress (mid-2010), using a unique bond-level dataset of European Central Bank (ECB) purchases of Greek sovereign debt. ECB bond buying had a large impact on the price of short and medium maturity bonds, resulting in a remarkable “twist” of the Greek yield curve. However, the effects were limited to sovereign bonds actually bought. The study finds little evidence for positive effects on market quality or spillovers to close substitute bonds, credit default swap markets, or corporate bonds. The paper’s findings attest to the power of central bank intervention in times of crisis but also suggest that in highly distressed situations, this power may not extend beyond assets actually purchased.

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Greece set to win plaudits but not next tranche of bailout cash

by Jim Brunsden, Mehreen Khan & Kerin Hope

Financial Times
January 21, 2018

Eurozone finance ministers were set to hail Greece’s recent steps to improve its public finances on Monday — but also to hold off on giving Athens a full bill of health it seeks as it prepares to return to financial markets.

In Mário Centeno’s first meeting as president of the eurogroup, the finance ministers will confirm that Athens has adopted the vast majority of 113 economic reforms the country needs to take under this phase of its €86bn bailout.

The measures range from labour market reform to removing bureaucratic obstacles blocking a €7bn tourism and leisure project in Athens.

For Greece to receive its next allocation of bailout money, estimated at €6.7bn, a further check will need to take place in early February to ensure that the remaining measures have been completed. But at Monday’s meeting ministers will say the recent progress in effect closes the latest review of the bailout.

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Greek parliament approves reform package in face of protests

by Kerin Hope

Financial Times
January 15, 2018

Greek lawmakers on Monday approved an omnibus package of labour, energy and fiscal reforms needed to wrap up the penultimate review of its €86bn bailout, as police clashed with leftwing demonstrators outside the parliament building.

The protests were prompted by a controversial labour reform that requires unions to win the support of 50 per cent of their membership before calling a strike. Public transport and government offices shut down on Monday as workers stayed away in protest against the move.

Protestors also objected to the launch of electronic auctions to dispose of properties that banks have already foreclosed on, as well as looming cuts in social benefits to be decided later this year.

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How Greece sleepwalked off a cliff in 2009, in black and white

by Yiannis Mouzakis

Macropolis
January 15, 2018

Nine years since facing bankruptcy and subsequently having experienced the most severe economic crisis in its modern history, which took away a quarter of the economy and employment, a country should at least have identified the reasons that it found itself in such a mess.

A self-respecting political system burdened by the responsibility of chronic shortcomings should have reached a consensus, which would ensure that future generations will never face a similar calamity.

Greece, though, is not a normal country and certainly does not have a political elite that respects itself, or anyone else.

All these years, Greeks have been fed a diet of half-truths, conspiracy theories and witch-hunts that mainly aimed at deflecting the attention and discouraging any serious debate about what happened in 2009.

All sorts of ridiculous claims have been thrown around, from a global conspiracy to steal the country’s “rich natural resources” to scapegoating the head of the statistical office even though he hadn’t even started the job when the events unfolded.

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Greece: suspension of protection grant after first-ever government appeal against positive asylum decision

European Council on Refugees and Exiles
January 12, 2018

The Administrative Court of Appeal of Athens has accepted a request by the Greek Ministry of Migration Policy for a provisional order to suspend a decision of the Appeals Committee granting refugee status to a Turkish soldier, pending the outcome of judicial review proceedings against the decision. The highly unorthodox order, issued on grounds of public interest to avoid risks of disruption of diplomatic relations with Turkey, follows the first-ever challenge of an Appeals Committee decision by the government before the court. The soldier has been arbitrarily detained following the order.

“The case is a blow not only to the right to asylum, but also to the rule of law and human rights, which the judiciary will once again try to remedy,” said Eleni Koutsouraki, lawyer of the Greek Council for Refugees who represent the applicant.

The applicant was among a group of eight soldiers arriving in Greece following the attempted coup d’état of 15 July 2016 in Turkey. While their extradition upon Turkey’s request was blocked by the Greek Supreme Court due to risks of ill-treatment, his asylum application was rejected by the Asylum Service on grounds of commission of a “serious non-political crime” under the exclusion clauses of Article 1F of the Refugee Convention on the basis that the acts committed were disproportionate to the political aim pursued. The Appeals Committee noted, however, that no documents in the case file contained evidence of the appellant’s participation in the attempted coup d’état, the killings of civilians or the attempted murder of the Turkish President.

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Macedonia says new push underway to resolve naming dispute with Greece

by Kerin Hope

Financial Times
January 9, 2017

The Republic of Macedonia’s deputy prime minister for European affairs said on Tuesday that a new push was underway to settle a 25-year-old dispute with Greece over the country’s name.

After a meeting with Greek foreign minister Nikos Kotzias in Athens, Bujar Osmani said both sides were committed to resolve the issue within six months.

They have already agreed that Macedonia, known internationally as Fyrom (Former Yugoslav Republic of Macedonia), should adopt a “composite” name.

According to diplomats, this would most likely be either “New Macedonia” or, in a geographical reference, Vardarska Macedonia. The use of a composite name would avoid confusion with Greece’s own region of Macedonia.

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Hedge Fund Sees Juice in Greek Rally as Yields Hit 2006 Low

by Todd White & Sid Verma

Bloomberg
January 9, 2018

One of Western Europe’s most dramatic bond-convergence trades this decade -- Greece over Germany -- looks like it will reward investors yet again in 2018.

London hedge fund Algebris Investments is among those betting economic momentum will take the country’s borrowing costs even closer to Germany’s after the Mediterranean country’s 10-year yield spread narrowed by about 44 basis points this month alone. Algebris says it may shrink by as much as 75 basis points.

Greece’s economic recovery and speculation the country may exit its bailout program this year are coinciding with strong risk appetite, driving down borrowing costs.

“Greece has been one of our strongest views in 2017 and 2016,” said Alberto Gallo, a portfolio manager and head of macro strategies at Algebris Investments. The firm has cashed out on some of its positions even though it continues to favor the trade, he said.

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Turkish officer’s asylum ‘temporarily’ suspended by Greek court

by Kerin Hope

Financial Times
January 8, 2018

A Greek court has accepted an unusual government request to “temporarily” suspend the granting of political asylum to one of eight Turkish officers who flew an army helicopter to Greece in July 2016 after an attempted military coup in Turkey.

The court cited the “public interest…and the interests of the officer himself” in its decision. Suleyman Ozkaynakçi, the co-pilot of the helicopter, was ordered to be held in custody until a full hearing of the case on February 15.

Greece’s independent asylum authority granted asylum to the officer in December, 10 months after its supreme court rejected Turkey’s extradition request for the eight officers. They all applied for asylum in Greece.

The asylum authority said in its ruling there was no evidence that Ozkaynakçi participated in the coup, and that Turkey was seeking his extradition for political reasons.

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The New Greek Oligarchy

by Alexander Clapp

American Interest
January 5, 2017

Ivan Ignatyevich Savvidis has played many unusual roles in his life—one of the great tobacco tycoons of Eurasia, a member of Russia’s Duma, a confidante of Vladimir Putin —but it is his latest one that is now sounding off alarm bells throughout Europe. Savvidis is the parvenu of Greece’s oligarchic scene. Since the onset of the economic crisis, he has effectively seized personal ownership over vast sectors of Thessaloniki, Greece’s second city and its maritime gateway to the Balkans. The fire sale of old state assets—an auctioning process ordained by the European Union as part of its enforcement of economic austerity, but which has become overwhelmingly rigged by vested political interests within Greece—has given Savvidis a rare opportunity to invest hundreds of millions of euros into his ancestral homeland. A soccer team, a grand luxury hotel, a tobacco conglomerate, a water-bottling company, a fleet of beach resorts, a television station, a trio of newspapers, great stretches of coastline and blocs of Thessaloniki real estate, the port of Salonika and its industrial warehouses: these are but a few of the holdings that Savvidis has quietly acquired in the last eight years. The buying spree has lately given rise to a strange new coinage across the newspaper headlines and streets of his adopted city: Ivanaptiksi, “prosperity emanating from Ivan.”

This slow-motion conquest, taking place hundreds of kilometers from Athens in a city that makes few international headlines, has now begun to raise serious questions. How has a man worth $760 million on paper invested close to half of that amount in Greece in less than a decade? Allegations now being openly raised by the European press, along with concerns publicly voiced by the American ambassador in Athens, suggest that Ivan Savvidis is not what he appears to be: Masquerading as the financial savior of Thessaloniki, the theory runs, he is in fact a conduit of Putinist interests in the Aegean.

Seen in this light, virtually all of Savvidis’s business deals and public undertakings in Greece seem to serve Moscow’s agenda. His dealings with the center-right New Democracy party—marrying off his niece to its general secretary, pitting its various clans against one another, peeling off the loyalties of its elected constituents through purported bribery all across northern Greece—appear an effort to sow division within the party most bent on Greece’s continued membership in the European Union. His purchase of Thessaloniki’s port seems a move to stymy NATO’s naval access to the interior of the Balkans, a region at the convergence of Russian and American spheres of influence. The millions of euros Savvidis has donated to the monasteries of Mount Athos for the construction of new churches act simultaneously as a Russian investment of soft power in a no-man’s land of international authority and financial transparency.

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Greece risks complacency as its eight-year bailout cycle ends

by Tony Barber

Financial Times
January 4, 2018

Like Prometheus, the mythological titan, Greece has been chained to a rock since 2010, its liver gnawed by pitiless foreign creditors as punishment for having sparked the eurozone debt crisis. So runs a certain national narrative. But just as the heroic Hercules rescued Prometheus, so Alexis Tsipras — in his own eyes, at least — is the leader who will achieve Greece’s salvation in 2018 by ending an eight-year cycle of bailouts and restoring the nation’s sovereignty.

It represents an extraordinary turnround for Mr Tsipras. He took office in January 2015 as the most radical leftist prime minister of a European democracy in the post-1945 era. An intransigent opponent of the creditors, he abhorred their stranglehold on Greek economic policy. His foolhardiness almost caused Greece to crash out of the eurozone. Then at the eleventh hour he reversed course and started doing the creditors’ bidding. His surrender kept Greece in the currency union.

Barring some unforeseen turmoil in domestic politics or global markets, Greece will leave its third bailout, this one worth €86bn, in August. European governments and EU institutions will declare that Mr Tsipras and his government have done enough, by maintaining a fiscal surplus and carrying out economic reforms, to justify an exit. To everyone’s relief, this will, in principle, draw the curtain on the acute phase of a crisis that has dragged on for eight years of the eurozone’s 19-year existence.

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