Sunday October 26, 2014 Search
Weather | Athens
17o C
13o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
Hellenic petroleum structured note draws bets on Greek recovery

By Alastair Marsh

Bank of America Corp. sold the first structured notes tied to Greece’s largest refiner, Hellenic Petroleum SA, as investors bet on a recovery in the nation at the heart of Europe’s debt crisis.

The lender raised a total $8 million in the first securities linked to a Greek company since 2008, according to data compiled by Bloomberg. The notes combining debt with derivatives were offered in four parts and mature in ten weeks to 36 weeks.

Investors are returning to Greece after international creditors approved a further 7.5 billion euros ($9.7 billion) of bailout funds to the country last week, citing progress in fiscal and structural reforms. That was followed by an upgrade from Fitch Ratings, which sparked a sovereign-bond rally that pushed yields on 10-year bonds to the lowest in three years.

“Positive momentum is building in Greece and some investors are assuming the worst is over and looking for opportunities to profit from a recovery,” said Nordine Farsi, head of structured credit trading at Landesbank Baden-Wuerttemberg in London.

The zero coupon bonds linked to Hellenic Petroleum were sold at a discount of 1.7 percent to 6.3 percent. Investors in zero coupon securities typically receive returns based on the difference between the discount and par.

Alexandra Parry, a spokeswoman for Bank of America in London, and Vasilis Tsaitas, a spokesman for the Athens-based refiner, declined to comment on the notes.

Hellenic Petroleum entered the bond market for the first time last month, selling four-year notes that pay a coupon of 8 percent, according to data compiled by Bloomberg. Investor demand for riskier assets spurred the unrated refiner to increase the size of the offering to 500 million euros from 400 million euros.

Demand for debut bonds from Greek refrigerator equipment supplier Frigoglass SA, which sold 250 million euros of debt last week, also exceeded expectations, said Torsten Tuerling, chief executive of the junk-rated company.

“There is strong momentum towards anything Greek at the moment,” said Gabriel Sterne, an economist at Exotix Ltd., a London-based brokerage specializing in illiquid bonds and loans.

Fitch upgraded Greece’s credit rating to B- from CCC, or six levels below investment grade, on May 14, citing progress in rebalancing the economy and a lower risk of exit from the euro area. Still, public debt sustainability remains “far from assured and will be dependent on economic recovery and a sustained primary fiscal surplus,” Fitch said in a statement.

Greece’s economy will shrink another 4.2 percent this year, its sixth year of recession, before recovering 0.6 percent in 2014, according to a European Commission report published May 17, which described the country’s outlook as “inherently uncertain.” Unemployment also reached a record 27 percent in February, according to the Hellenic Statistical Authority.

Xenon Capital Plc, a special-purpose vehicle incorporated in Ireland, sold the last structured notes tied to a Greek company in May 2008, Bloomberg data show. The 5 million euros of 3 1/2-year notes were linked to the debt of Alpha Bank SA, Greece’s third-biggest lender.

Credit-linked notes can have higher yields and tailored maturities that may not be available in the bond market. Investors suffer losses in the event of a default by the bank issuing the securities or the linked entity. [Bloomberg]

ekathimerini.com , Tuesday May 21, 2013 (11:29)  
Nicosia says reforms are bringing results
TAIPED waits for green light from Eurostat
Trade deficit shrinks on big drop in imports
SMEs unable to claim subsidies
Samaras pledges action after flash floods in Athens
Authorities began on Saturday assessing the damage done by flash floods in various parts of Athens a day earlier, with Prime Minister Antonis Samaras pledging that all those affected would b...
No court hearings for civil cases
Greek courts are to stop conducting hearings, which include witness questioning, for civil cases, according to plans drawn up by the Justice Ministry. Kathimerini understands that in a bid t...
Inside News
BASKETBALL
A win is a win is a win for Olympiakos
A bad Olympiakos defeated a worse Laboral Kutxa 63-57 to make it two out of two in the Euroleague on Friday. In a game where the two teams had an overall field goal rate of about one in thre...
SOCCER
Panathinaikos snatches point at Eindhoven
Panathinaikos offered its fans a glimpse of its glorious past in European competitions snatching a draw at PSV Eindhoven, on an otherwise bad night for Greek soccer in the Europa League, as ...
Inside Sports
COMMENTARY
End of reason, end of humanity
The effects of a slew of new and increased taxes introduced since the start of the crisis were first observed in the wages of those still fortunate enough to have jobs, who saw their take-ho...
EDITORIAL
Banks need to step up
What has been leaked so far regarding the results of the stress tests on Greece’s lenders, which are due to be published on Sunday, appears positive. Greece needs a healthy, private banking ...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. Nicosia says reforms are bringing results
2. Samaras pledges action after flash floods in Athens
3. No court hearings for civil cases
4. Greece’s lenders seem adamant that gov’t must act on bailout commitments
5. Future of Attica trash set to become clearer
6. Policeman admits to murder of his cousin-in-law
more news
Today
This Week
1. End of reason, end of humanity
2. Samaras pledges action after flash floods in Athens
3. Banks need to step up
4. Greece’s lenders seem adamant that gov’t must act on bailout commitments
5. No court hearings for civil cases
6. Nicosia says reforms are bringing results
Today
This Week
1. The past, present and future of the Greek debt crisis
2. Greece’s closed society is central to its current malaise
3. Greece must stick to reforms, says Schaeuble
4. At least 11 banks to fail European stress tests, three in Greece, report says
5. Cyprus to block Turkey's EU talks after EEZ violation
6. Stop moaning and get in the game
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2014, H KAΘHMEPINH All Rights Reserved.