Greek Companies Draw on Samaras Confidence With Bond Sales
A recovery in the nation that set off the euro region’s debt crisis is allowing Greece’s largest electricity company to return to the bond market for the first time since 2000.
Public Power Corp SA (PPC) sold 700 million euros ($971 million) of notes after initially marketing 500 million euros, while Greek gaming system developer Intralot SA (INLOT) is issuing 250 million euros of notes after increasing the deal from 200 million euros, people familiar with the sales said. The two Athens-based borrowers are the first non-financial Greek companies to issue bonds in Europe this year, data compiled by Bloomberg show.
Confidence is returning to Greece after the government ended a four-year exile from international markets on April 10, issuing 3 billion euros of bonds in a sale that saw demand exceed supply by almost seven times, according to Prime Minister Antonis Samaras. The economy is set to grow 0.6 percent this year, officials said today, the first expansion in seven years.
“Greece was the poster child for the sovereign crisis and it’s back,” said Juan Esteban Valencia, a strategist at Societe Generale SA in Paris. “It’s a vote of confidence in the work that’s been done there, but mostly, it’s the fact that people are really desperate to look for yield.”
PPC sold three- and five-year bonds that were priced to yield 4.75 percent and 5.5 percent, while Intralot is selling seven-year notes to yield 6.125 percent. The gaming company last issued bonds in the currency in August, when it sold five-year securities paying a coupon of 9.75 percent, according to data compiled by Bloomberg.
Greece set off Europe’s debt crisis in 2009 when the government revealed its budget deficit had swelled to more than five times the region’s permitted limit. That led to two international bailouts totaling 240 billion euros.
Greece will pay back 2.5 billion euros of debt this year, Alternate Finance Minister Christos Staikouras said today, as he presented the nation’s new medium-term fiscal plan in Athens. The government also plans to raise as much as 6 billion euros from bonds in the next 12 months, he said.
The outlook for the country’s banking system was upgraded to stable from negative by Moody’s Investors Service yesterday. The ratings company cited the economic recovery and Greek banks regaining access to international capital markets.
National Bank of Greece SA issued 750 million euros of senior bonds last week in a sale that was three times oversubscribed, according to the Athens-based lender. The 4.375 percent notes, which mature in April 2019, are rated Caa1 by Moody’s, seven steps below investment grade.
It followed a 500-million euro bond offer from Piraeus Bank SA (TPEIR) on March 18, the first public issue of debt by a Greek financial company since 2009, data compiled by Bloomberg show. The 5 percent notes, also rated Caa1, have since risen almost 4 euro cents to 103.6 cents, according to Bloomberg bond prices.
Borrowing costs for companies in Greece, Spain, Portugal, Italy and Ireland are now lower than those in core countries such as France and Germany. The average yield on peripheral corporate debt fell 18 basis points this month to a record 1.75 percent compared with 1.79 percent for non-peripheral bonds, according to Bank of America Merrill Lynch’s Euro Periphery Non-Financial Index.
“The riskier issuers will gradually get access to the market as the economic situation improves and provided risk appetite remains high,” said Riccardo Barbieri, chief European economist at Mizuho International Plc in London. “A lot of people are looking at Greece as a recovery story and this year the economy will provide some encouragement on that.”
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