Greece

In the space of just a few weeks, two Greek banks have made their first sales of capital instruments since the financial crisis: Piraeus Bank in June, followed by National Bank of Greece this week. With debt market valuations at all time highs, some market participants say that it is now or never for Europe's weakest financial institutions. David Freitas reports.

National Bank of Greece showed market participants on Thursday that investors are still ravenous for higher beta products across peripheral Europe. Marketing a tier two bond, the bank attracted demand worth more than four times the final size of its €400m deal.

National Bank of Greece said on Tuesday that it had picked banks to arrange a tier two bond transaction as part of its plans to raise €800m in the format. The bank could become only the second Greek issuer of subordinated debt since the financial crisis, following a new tier two from Piraeus last month.

Energean Oil and Gas, the Greek exploration company listed on the London Stock Exchange, won strong investor support on Thursday morning for a transaction backing a new M&A deal.

Piraeus Bank offered hope to other Greek banks hoping to access bond funding by printing a tier two bond on Wednesday. It was the first Greek issuer to have sold a deal in this asset class since the financial crisis, getting hefty orders in the process.

Piraeus Bank found enough appetite in the market on Wednesday to launch the first tier two bond out of Greece since the crisis. It raised €400m of capital at a coupon of 9.75% — 50bp tighter than initial price thoughts.

Greece's Piraeus Bank said on Thursday that it would issue a tier two bond with a 10 year non-call five maturity, after announcing last year that it was waiting for the "right timing" to make good on capital strengthening plans agreed with the European Central Bank.

After restructuring its soft bullet programme to a conditional pass through (CPT), Alpha Bank’s covered bonds have been upgraded to Baa3, making them eligible for repo with the European Central Bank, thereby improving their appeal with investors, putting the bank in a stronger position for a return to the market.

Equity investors welcomed the prospects of elections in Greece, sending bank stocks up 25% this week. But with banks in the country struggling with non-performing exposures (NPE), the debt market is unlikely to see a change in negative sentiment, said FIG bankers.

The souring of trade talks between the US and China has sounded a bum note this week to what Greece had hoped would be a harmonious market in looking to price its benchmark bond. Bankers now believe the sovereign should wait for a better opportunity.

Greece and the European Stability Mechanism will reinvigorate the euro public sector market next week with benchmark bonds in the short to mid part of the curve, according to bankers.

Public sector bond market participants expect Greece to return to the market next week for its third syndicated transaction of the year.