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Mid-caps are eyeing the corporate bond market

By Anestis Dokas

Local companies, investors and traders are bracing for the start of operation of the new corporate bond market in the alternative market of the Athens Stock Exchange. Over 15 firms have expressed an interest in participating in the new market, whose advantages include companies being required to present a simple information note approved by the stock market’s administration and not a minimum amount in a bond issue.

Investors interested in participating in the corporate issues will be able to declare via stockbrokerage companies the amount they wish to invest through a central book-building process. The transaction will be conducted via the stock market’s electronic book of offers and will entail a reduction of both time and costs, as well as simplifying the procedure for entry to the alternative market.

The creation of this corporate bond market will serve to support small and medium-sized enterprises that are export-oriented and innovation-driven, as well as companies active in Greece with a good financial structure but unable to secure refinancing due to local banks’ inability to offer their support.

The most important feature the average investor needs to know is that the negotiable corporate bonds behave more like stocks than bonds but have a smaller variability and risk than corporate shares.

Foreign investment funds include Greek corporate bonds in a basket of dynamic enterprises of increased risk that could fetch great profits. The same category also includes companies from Italy, Spain, Portugal, the Czech Republic, Poland, Bulgaria and Romania. What hedge funds care for that the countries in which the companies have the right economic conditions to guarantee the smooth operation of listed companies for at least five years.

Sources have told Kathimerini that the biggest drawback in the international bond issues is the additional burden of 1 percent on the borrowing interest rate for major international firms, which also pertain to listed companies with a capitalization of at least 400-500 million euros.

There is a marked increase in the number of mid-caps seeking consultants in order to submit their applications for entering the new market of corporate bonds after having already been informed by their creditors that they cannot expect their credit lines to become any easier.

More large caps are also proceeding with corporate bond issues, as after the systemic banks, PPC and Intralot that recently drew liquidity from the international markets, the Mytilineos group will also have its own issue, probably this month. Kathimerini has learned that the final contacts of Evangelos Mytilineos for the international issue of a corporate bond started just after Easter. The head of the group has already had a series of contacts with foreign investment funds that have shown great interest in participating in the issue of the firm, which ranks among Greece’s the five most profitable industries.

The group will have to address this bond to the foreign markets only, as its capital requirements cannot be covered by the local banks and investment funds. Its management is carefully examining all offers to decide which funds it will choose for the issue of the bond. Mytilineos’s aim is to secure the best possible borrowing rate a Greek listed company has secured, after one of the recent PPC issues obtained a 4.75 percent rate.

ekathimerini.com , Friday May 2, 2014 (20:14)  
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