The Bank of Greece published its Monetary Policy Report with three revised scenarios for the Greek economy. The baseline scenario sees a -5.8% contraction followed by growth of 5.6% and 3.7% in the coming years. The benign scenario puts the recession at -4.4%, and the adverse scenario at 9.4%. The latest forecasts slightly upped the severity of the central bank’s April estimates of the coronavirus pandemic’s impact.
The government announced a further €3.5-billion package to support businesses and protect jobs in the wake of the health crisis. The measures focus on tax relief and liquidity for businesses through the summer, while the package will also cover social security contributions until October.
Prime Minister Kyriakos Mitsotakis told the FT that he will oppose any additional oversight as a condition of the EU’s Recovery Fund. Looking back on the decade-long economic crisis, Mitsotakis argued, “Greeks have matured a lot – and we want to do our own reforms.”
Earlier in the week, the prime minister’s chief economic advisor Alex Patelis presented the outlines of the government’s recovery plan at a virtual conference organised by the European Commission and think tank IOBE. The plan, which will form the basis of Greece’s proposals to the Commission in October, rests on four pillars: green development, digital transition, investment, and employment and social cohesion. Addressing the challenge of absorbing the country’s potential €32 billion portion of the EU recovery fund, Patelis stated his confidence that the government could present a cohesive plan to transform the economy, adding, “reforms are in our DNA”.
The news that visitors from large markets including the UK and the U.S. face a minimum 2-week delay in being able to enter Greece for holidays has lead tourism industry experts to expect no more than €4-5 billion total travel receipts in 2020, compared to €18.2 billion in 2019.
Tour operator TUI inked a strategic agreement with the Greek Tourism Ministry, the first of its kind, to bring a minimum of 1.5 million travellers to the country this year over an extended tourist season. TUI brought 3 million visitors to Greece in 2019.
Regional airport operator Fraport is seeking to activate a compensation clause in its contract with the Greek government for loss of revenues during the lockdown. Traffic numbers for May plummeted by 84%, with international flights virtually eliminated and domestic arrivals down by 63%, leading to an estimated €175 million euros in lost revenues in the first half of 2020.
Greek conglomerate GEK-Terna raised €500 million with a 7-year bond, a new record since corporate bond issues launched on the Athens exchange. The issue was oversubscribed by a factor of 1.5 and the yield settled at 2.75%. Greek corporates are expected to take advantage of a 70% fall in the cost of borrowing since March to both issue and buy back debt. GEK-Terna intends to channel the majority of the funds towards a €3.5-billion investment programme.
In the coming days, Titan Cement is also planning to tap the markets for €250 million with a 7-year issue.
Greece plans to offer tax incentives to entice retirees from abroad. Proposals include a flat 7% tax for those moving their tax domicile to Greece.
Energy & Infrastructure
The first stage in the tender for a 50-year concession on the South Kavala Underground Natural Gas Storage Facility was launched by privatisation fund HRADF, with a deadline of August 31 for expressions of interest. The concession will include the conversion of the depleted gas reservoir into an estimated 1 bcm storage facility, complementing a number of strategic energy infrastructure projects in the region.
HRADF is also preparing to launch the tender for a majority (67%) stake in Alexandroupoli and Igoumenitsa ports, as well as a concession to operate the port of Kavala before the year’s end. A second wave of tenders is planned for H1 2021, including stakes in the Volos and Iraklio ports.
Alpha Bank concluded a deal with Poseidon Financial Investor DAC, an affiliate of Fortress Investment Group LLC, for the sale of a €1.1-billion portfolio of NPEs. The Neptune portfolio, consisting of SME loans secured on property, was sold for €264 billion, or 24% of face value. Alpha Bank has also received non-binding offers for its Project Galaxy portfolio and its servicing arm, Cepal, and is aiming to conclude both deals by the end of 2020.
EU member states reached an agreement on the Just Transition Fund, the funding tool aimed at speeding up decarbonisation of the block’s economies. Greece has been allocated €1.7 billion euros to spend on retraining schemes, SME support, and investments in regions transitioning away from the lignite economy.
Prime Minister Mitsotakis was present at the start of demolition works at the site of the old Athens airport, which will make way for the emblematic Hellinikon redevelopment project. The €8-billion project is now awaiting the award of a license for the operation of a casino resort which will anchor a residential, retail, and entertainment complex along with a metropolitan park.
The ASE general index plummeted -30%, wiping €16.85 billion off its value in the first six months of 2020, making it one of the hardest-hit equity markets in Europe due to the pandemic. Prices have rebounded by 36% from the low point on March 17, and June closed with a small loss of -2.1%.
Over the past week the index rose 2.5% to close at 658.55 points, with volumes remaining at low levels.