Bonds News

Greece's slow reforms may delay return of bond profits - sources

Athens, Nov 20 (Reuters) - Greece is at risk of missing a first tranche of ECB profit returns on Greek bond holdings due to delays in the pace of privatisations despite over-performance on its fiscal targets, sources told Reuters on Tuesday.

About 4.8 billion euros ($5.48 billion) of profits from Greek bonds held by the ECB and other eurozone central banks are supposed to be channelled back to Athens by June, 2022 in semi-annual tranches, as agreed with Greece’s lenders under a post bailout agreement.

Greece concluded its third bailout in August but agreed to continue structural reforms under scrutiny from the European Commission.

Linking the so-called ANFA and SMP profit returns to Greece’s post bailout performance was seen as an incentive for Athens to remain committed on hard-won reforms adopted under three bailouts worth more than 280 billion euros.

The first 600 million-euro payment from the ANFA and SMP incomes was expected in December this year.

“The (European) Commission in its enhanced surveillance report that will be published in the coming days will refer negatively to the country’s performance on reforms such as privatisations,” a source said.

“That might delay the first payment of ANFA and SMP profits by a few months,” the source said, adding that there are also delays in state arrears payments to suppliers.

A second source confirmed the delay in payment due to slow progress on reforms.

Finance ministry officials were not immediately available for comment.

Athens promised to raise 2 billion euros from privatisations this year but has only managed 700 million euros so far.

Mario Centeno, the chairman of euro zone’s finance ministers, said earlier on Tuesday that Greece is likely to beat its primary surplus for the third year in a row but needs to continue the reforms it promised.

Any delay in payment would not affect the country’s fiscal position or debt repayments.

Greece will present its final budget draft on Wednesday, projecting a primary surplus of more than 3.8 percent for 2019 versus a lenders target of 3.5 percent. ($1 = 0.8763 euros) (Reporting by Lefteris Papadimas, editing by Michele Kambas and Ed Osmond)