First Greek Bank Since 2014 Plans Bond Sale as Crisis Echo Fades

  • National Bank of Greece hires underwriters for covered bonds
  • Impasse with IMF left banks reliant on emergency funds

National Bank of Greece SA is planning the first bond sale by a Greek bank since 2014, before an impasse with international lenders crippled the nation’s financial system.

The country’s oldest bank hired Bank of America Merrill Lynch, Deutsche Bank AG, Goldman Sachs Group Inc., HSBC Holdings Plc, NatWest Markets and UBS Group AG for a benchmark-sized issue of three-year covered bonds in euros, according to Apostolos Mantzaris, an official at the Greek bank’s capital markets division. They will host meetings with institutional investors across Europe starting Wednesday.

Regaining access to bond markets is a key step for Greek banks as they curb dependence on the central bank’s Emergency Liquidity Assistance. The program has kept the financial system afloat since 2015, when the newly-elected government clashed with creditors including the International Monetary Fund over the terms of its bailout. The same year, Greek banks wrote down about 3.4 billion euros ($4 billion) of their unsecured notes.

The banks remain saddled with soured loans and regulators may need to stress-test them earlier in 2018 than originally planned, ECB President Mario Draghi said last week.

“It’s probably not the best timing with the IMF review not yet finished, but maybe they are preparing to issue once that is done,” said Otto Dichtl, a fixed-income analyst at brokerage Stifel Nicolaus Europe Ltd.

Greek Bank Considers Returning to Bond Market as Soon as October

National Bank follows the Greek government’s return to bond markets after three years, when it raised 3 billion euros on July 25. So far, government-backed agencies such as the European Investment Bank have been the only buyers of Greek covered debt, including bonds being sold by Piraeus Bank SA.

It’s deemed the safest type of bank debt: it has a guarantee from the issuer and is backed by a pool of assets such as mortgages. Covered bonds are also excluded from European bail-in rules.

— With assistance by Marcus Bensasson

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE