Greece’s Banking Sector Returns to Capital Markets with NBG Bond Issuance

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National Bank of Greece has sold a €750m covered bond, marking the first time the country’s banking sector has tapped international capital markets since 2014. Covered bonds are issued by banks and backed by pools of loans, providing the investor with additional safety in the event of default, the Financial Times reported. The three-year bond, which is rated single B by Fitch, pays a coupon of 2.75 per cent. The yield on the Greek 2-year sovereign is currently at 3.14 per cent. The successful issuance is the latest boost for the country’s troubled banking sector, which is still weighed down by €100bn in non-performing exposures. A series of distressed deals are expected to take place over coming months, according to market participants. Share prices of the major Greek banks rose in late September after an IMF official played down the need for a “full asset quality review”, suggesting that stress tests from the European Central Bank early next year could suffice. Read more. (Subscription required.)