* Greek bank debt hits all-time lows
* Investors perspective zone as un-investable
By Alice Gledhill
LONDON, Jan 30 (IFR) – The cost of Greek bank debt hit
all-time lows this week, shutting off their entrance to wholesale
funding and augmenting their faith on executive bank funding.
Greek lenders that enjoyed something of a rebirth last
year, permitting them to lift 2.25bn in a bond marketplace saw
prices fall and yields spike after anti-austerity party
Syriza won final Sunday’s elections, stocking fears of a
potential Greece exit from a eurozone.
A 500m Mar 2017 bond for Piraeus Bank was
quoted usually next 22% on Friday, a burst from a 5.125% produce at
which it labelled in Mar final year.
A identical design could be seen opposite a sector, with
Eurobank’s 4.25% 2018 bond attack 17.35%, Alpha Bank
3.375% 2017s attack 18.29% and National Bank of
Greece’s 4.375% 2019s attack 16.29%.
“Before a Grexit worries, banks were looking actually
quite descent. And presumption there is a liquidity backstop,
it was an engaging enlarged position and one of these “recovery
stories”,” pronounced one investor.
“Until there is a clever and convincing joining from the
EU/Greek supervision that ensures puncture liquidity for banks,
these sojourn un-investable to me.”
His perspective was echoed by other genuine income investors and bond
“I don’t consider they will be means to entrance a market
anytime soon,” one landowner said. “I would contend that they are shut
out of a marketplace for during slightest 6 months, if not longer.”
Another financier pronounced that a cost moves had been
exacerbated by investment banks’ hostility to yield liquidity
in a bonds, adding fuel to a glow and creation a situation
worst than it already was.
Fears of deposition outflows from a banks have increasing in
“Several banks remarkable a numbers discussed in a media of a
deposit outflow of about 10bn or some-more given mid-December 2014,
with 3bn in Dec and about 8bn in January,” Citigroup
analysts, who met a 4 vital banks this week, pronounced in a
They combined that a outflows had been most smaller on Monday
January 26, a day after a Greek ubiquitous election, compared
to a before week.”
“We will have to wait and see a policies that the
government announces in a entrance days on this. If they can
arrest a outflows, afterwards everybody can pierce on,” pronounced Darren
Ruare, conduct of bound seductiveness during Investec Asset Management.
Greek banks have been heavily fortuitous on a ECB for
funding, though this is fortuitous on Greece remaining within the
EU support programme.
Also, that a ECB is set to repel eligibility of
retained government-guaranteed comparison unsecured holds as
collateral for repo functions from Mar 1 2015 will expected add
further strain, according to Barclays.
Banks could also review to a Emergency Liquidity
Assistance (ELA) from a Bank of Greece, though this has the
potential to be capped, is some-more dear (at 1.55%) and is subject
to ECB ruling legislature approval.
Barclays believes that ELA appropriation for Greek banks is likely
to turn crucial, along with a ECB’s preference to keep credit
Reports are present that Piraeus Bank, Eurobank and
Alpha Bank have already practical for ELA appropriation as a
Immediate entrance to liquidity is not a usually risk faced by
Greek banks. Barclays analysts warned in a note that a potential
sovereign debt renegotiation could have an impact on their
“While bank emperor debt land are significantly lower
post a Public Sector Involvement (PSI), they remain
significant relations to a distance of a banks’ collateral bases for
all banks solely Piraeus,” they wrote.
According to Barclays, approach Greek supervision bearing as a
percentage of Common Equity Tier 1 is usually next 90% for NBG,
around 45% for Eurobank, 40% for Alpha and underneath 10% for
There is also a awaiting of Syriza seeking debt
forgiveness of some of a banks’ non-performing loans, which
could strike solvency further.
An additional worry for investors is a nonesuch of Tier 1
or Tier 2 holds that would act as a loss-absorbing pillow for
senior unsecured debt should a bank run into trouble.
While reported CET1 ratios are robust, averaging 15%, this
lack of loss-absorbing ability has contributed to a weak
performance of a comparison bonds, Barclays analysts wrote in
While a design looks grave for Greek banks, other European
banks have not been impacted and spreads, even in a periphery,
have remained tight.
“To be honest, we feel utterly private from Greek bank funding
nowadays. Even if Greek banks couldn’t fund, we usually don’t really
see it creation most disproportion to financials as a sector,” pronounced a
And should a choosing outcome eventually lead to Greece’s
exit from a euro, many peripherals would be in a identical boat,
“If there were indeed a Greek exit, we’d design risk
premiums to arise generally for non-German continental Europe,
but we wouldn’t design it to be element nor prolonged, with the
ECB technical cause ancillary a market.”
(Reporting By Alice Gledhill, Additional stating by Helene
Durand, Editing by Philip Wright)