Athens Digest 14.06.2017

• “North Macedonia deal” challenged; opposition expected to raise non-confidence vote procedure in the parliament

• NATO’s Stoltenberg: FYROM invitation after ratification

• Greece says eyes on markets, not IMF; all eyes now on the next Eurogroup meeting

• Fitch upgrade decision on covered bonds a boost for Alpha, NBG and Piraeus Bank

# The day after the “North Macedonia” name deal, Prime Minister Alexis Tsipras faced the threat of a non-confidence vote in Greece. In an interview on state TV last night, Tsipras backed the proposed compromise as a victory over the “merchants of patriotism” in Athens and Skopje. He said Greece would not hold a referendum on the deal, and expressed confidence in his coalition partner, Defence Minister Panos Kammenos, insisting that their differences on the Macedonia issue would not bring down the government. Opposition leader Kyriakos Mitsotakis urged President Pavlopoulos to intervene for a discussion in Parliament on the agreement before the government signs it, and was widely reported to be considering submitting a censure motion after tonight’s vote on the prior actions omnibus bill.

# NATO Secretary General Jens Stoltenberg says FYROM will only be invited to join NATO after the name deal is ratified, easing Greek concerns that Skopje could renege on the agreement as a future alliance member. Speaking to Skai television, Stoltenberg again praised Prime Ministers Tsipras and Zoran Zaev for their efforts in ending the decades-old dispute.

# PM Tsipras played down the role of the IMF in Greece’s bailout exit last night. In his interview on state-run ERT, he said Greece no longer needed the funding from the IMF if it agreed to late participation in the programme. But he stressed that European lenders needed to press ahead with work on a debt relief solution. Finance Minister Euclid Tsakalotos stressed the importance of reaching an agreement at the next Eurogroup meeting: “It’s especially important for us that the financial newspapers like Handelsblatt, the Wall Street Journal, and the Financial Times do not write on June 22 that the Eurogroup again postponed the issue and did not settle the Greek debt issue,” he told Germany’s Die Zeit. “If that happens, obviously we won’t have access to the markets.”

# On his side, the president of the euroworking group Hans Vijlbrief expects that an agreement will be reached by the Eurogroup meeting on June 21. Speaking to journalists in Brussels, he said that he remains “a bit worried” about how the markets will be affected by a non-activation of the IMF’s Greek programme but the fund will reman one way or another on board. He stressed that Greece’s sustainable recovery after the end of the programme should be based on three pillars: No roll back, continuation of reforms and political stability.

# Fitch Ratings has upgraded the Greek mortgage covered bonds programmes of three systemic banks (Alpha Bank, National Bank of Greece and Piraeus Bank). Piraeus’, Greece’s largest lender, covered bonds are rated ‘BB-‘, five notches above the bank’s ‘ccc’ Viability Ratings (VR). Alpha’s as well as NBG covered bonds are rated ‘BB-‘, four notches above both banks’ ‘ccc+’ VR. The ratings actions follow the resolution of the Rating Watch on the issuers’ Viability Ratings, the update of the RMBS asset model assumptions for Greece and the periodic review of Greek covered bonds’ ratings.

On our Radar: Post Production
At a media event in Brussels, Greek government representatives presented the country’s post-programme strategy, insisting there was no need for a precautionary credit line and that reforms will continue after August. Alternate Economy Minister Alexis Charitsis presented the Greek 5-pillar growth plan. He claimed that Greece will remain committed to reforms after the exit of its ESM programme. Effie Achtsioglou, the labour minister, argued that planned pension cuts in 2019, were more about honouring agreements with the institutions than a financial necessity. “The cuts are not needed in terms of fiscal targets or the pension system’s sustainability,” she said. She claimed that the government will take advantage of the fiscal space in 2019 to ease the burden to those mostly affected.