- Sovereign, company securities change hands as uncertainty ebbs
- Bank notes miss out in still limited pickup in debt trading
Greek bonds started changing hands again after a national bailout agreement eased uncertainty that had paralyzed the market.
Trades this week have included short- and long-term government bonds, and economy-linked warrants, according to two people familiar with the matter, who asked not to be identified because the deals were private. Notes from companies heavily reliant on sales in Greece, such as Hellenic Petroleum SA and Hellenic Telecommunications Organization SA, have also been bought and sold, they said.
The limited resumption of trading follows an agreement between Greek Prime Minister Alexis Tsipras and European creditors that could let the country remain in the euro and access 86 billion euros ($94 billion) of bailout loans. Deals dried up for about two weeks as protracted negotiations and a referendum fueled uncertainty about Greece’s future in the single currency, deterring even most distressed-debt funds from buying local bonds.
“Trading has picked up from almost zero,” said Celestino Amore, founder of IlliquidX, a distressed debt-brokerage firm in London. “Funds are taking positions, although playing Greece is still a risky bet.”
The bailout plan faces a number of hurdles even after local lawmakers approved pension curbs and state-asset sales needed to open talks on aid. German Finance Minister Wolfgang Schaeuble said hours after Thursday’s early-morning vote in Athens that Greece can only get a debt reduction if it leaves the single currency. The deal also needs to be approved by a number of national parliaments, including Germany and Finland.
Notes traded this week included portions of a 4-billion euro Greek sovereign bond due 2019, the people said. The securities changed hands for 63 cents on the euro, they said. The bonds, issued at par in April 2014, were quoted at a record-low 39 cents on July 8.
Trading in government bonds remains “skimpy,” Amore said. This is because most are held by Greek retail investors and trading has been suspended on HDAT, the nation’s electronic secondary securities market, since June 29. Even before the shutdown, no government bonds changed hands on HDAT last month, according to data from the Bank of Greece and the Athens News Agency.
Many banks and brokers also still have internal bans on trading Greek assets, which is weighing on overall volumes, said Bill Blain, a strategist at Mint Partners in London. He declined to comment on whether Mint was trading in Greek assets or with Greek counterparties.
Bonds issued by Greece’s four main banks have been left out of the revival, the people said. That partly reflects concerns about cash shortages that have caused the government to keep branches closed since June 29 and limit customers’ ATM withdrawals to 60 euros a day.
Piraeus Bank SA’s senior notes due 2017 are at 34 cents, down from 41 cents at the end of June, according to data compiled by Bloomberg.
Hellenic Petroleum’s 325 million-euro bonds due 2019 have surged 24 cents since July 10 to 80 cents, recouping most of the losses suffered in the last four weeks as bailout talks stalled. The government may reduce its 35 percent stake in the refiner under a program of state-asset sales imposed by creditors.
“These bonds have rallied on the agreement, but there’s room for further gains,” said Dimitris Dalipis, a fund manager at Alpha Trust Mutual Fund Management SA in Athens.