Greek Telecom OTE’s Bonds Fall to Records on Euro Exit Concern

Bonds of Hellenic Telecommunications Organization SA dropped to record lows, leading declines among Greek corporate debt on concern the nation will leave the euro.

OTE’s 700 million euros ($778 million) of bonds due 2020 declined 12.4 cents on the euro to 74.9 cents on Monday, according to data compiled by Bloomberg, the worst performer on the Bank of America Merrill Lynch Euro Non-Financial High-Yield Bonds index. The company’s 700 million euros of notes due 2018 dropped 11 cents to 88.5 cents.

Greece shut its banks until at least July 6 and the Athens Stock Market was closed Monday after funding talks with the nation’s creditors collapsed and Prime Minister Alexis Tsipras said he’d put a proposed deal offer to referendum. A euro exit would make it even more difficult for domestic companies to repay their debt.

“OTE is a good company and runs operations outside Greece, which in theory can help to pay their bonds in euros, but volatility is quite dramatic,” said Olivier Monnoyeur, a London-based high-yield portfolio manager at BNP Paribas Investment Partners, who sold OTE notes in November. “You need to figure out whether they will be able to continue to pay interest in the worst-case scenario.”

OTE, Greece’s largest telecoms company, booked 73 percent of its revenue from Greece in 2014, the remainder coming from Romania and Albania, according to data compiled by Bloomberg.

Notes of Public Power Corp SA, Greece’s largest electricity utility, fell with its 500 million euros of notes due 2019 falling 9.9 cents to 58.9 cents, close to the record low of 58 cents reached on June 18. PPC, which is majority state-owned, derives all its revenue from within the country and is struggling to collect money from customers.

Titan Cement SA, which books more than 70 percent of its revenue from outside the country, saw its notes fall to the lowest on record. Its 300 million euros of bonds due 2019 dropped 5.5 cents to 87.6 cents, according to data compiled by Bloomberg.

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