After Hitting 1,100bps In Spread, Greece Finally Relents And Puts (Parts of) Itself Up For Sale
Today, Greek CDS hit an all time wide in spread. For the first time, this unpleasant phenomenon seems to have registered in the minds of Greek oligarchs, as finally, after months of dithering, the country is taking serious steps to moderate its bankruptcy. The steps in question are asset sales, and the assets in question are islands including portions of Mykonos, and all of Nafsika. So if you work in Goldman and need a nice place (with a non extradition treaty in place very soon) to stash the several hundred gold bar collection amassed over the past two years of record bonuses, here is your chance for a nice, cheap offshore vault, ironically in the very country whose finances you overrepresetned for years.
Greece is making it easier for the rich and famous to fulfill their dreams by preparing to sell, or offering long-term leases on, some of its 6,000 sun-kissed islands in a desperate attempt to repay its mountainous debts.
The Guardian has learned that an area in Mykonos, one of Greece's top tourist destinations, is one of the sites for sale. The area is one-third owned by the government, which is looking for a buyer willing to inject capital and develop a luxury tourism complex, according to a source close to the negotiations.
Greece has embarked on the desperate measures after being pushed into a €110bn bailout by the European Union and the International Monetary Fund last month, following a decade of overspending and after jittery investors raised borrowing costs to unbearable levels.
The sale of an island – or convincing a member of the international executive jet-set to take on a long-term lease – would help to boost its coffers. The Private Islands website lists 1,235-acre Nafsika, in the Ionian sea, on the market for €15m. But others are up for grabs for less than €2m – less than a town house in Mayfair or Chelsea. Some of the country's numerous islands are tiny rocky islets which could barely fit a single sunbed.
Only 227 Greek islands are populated and the decision to press ahead with potential sales has also been driven by the inability of the state to find funds to develop basic utility infrastructure, or police most of its islands. The hope is that the sale or long-term lease of some islands will attract investment that will generate jobs and taxable income.
"I am sad – selling off your islands or areas that belong to the people of Greece should be used as the last resort," said Makis Perdikaris, director of Greek Island Properties. "But the first thing is to develop the economy and attract foreign domestic investment to create the necessary infrastructure. The point is to get money."
As strikes almost paralysed the country and hedge funds bet against the economy, German politicians called for Greece to start selling islands, historic buildings and artworks. It now appears that the Greek government has heeded their demands.
The City, where investors are increasingly shunning Greek investments, welcomed any island sales. "It's a shame if it has come to this but it does at least demonstrate that Greece is prepared to take all actions necessary to try and meet its obligations," said Gary Jenkins, a credit analyst at Evolution Securities.
At the end of the day, Germany once again gets its way. And since in 2-3 years America will be in the same sad state, we should already be sending out Goldman's crack asset disposition team (the same guys pitching BP's various holdings), to France, Spain and Russia: we hear the two countries may be interested in some nice (if slightly soiled) parts of the continental US. And, on an inflation-adjusted basis, the US may just come out on top of these particular trades.