Eurobank’s bond issued on Wednesday enjoyed an impressive coverage ratio, as it received bids of 1.3 billion euros for its senior preferred note through which it raised €500 million at an interest rate of 2% and with a coupon of 2.125%.
The six-year bond has a revoke option for the bank after five years and is aimed at expanding liquidity sources with more financing tools.
The issue secured favorable pricing as it followed Greece’s credit rating upgrade by Standard & Poor’s last week and coincided with S&P’s upgrading of local banks’ ratings on Wednesday.
The upgrade of Eurobank, Alpha and National to B+ and Piraeus to B favors the systemic lenders’ plans to tap the markets in the context of the obligations the monitoring authorities have imposed on them to cover minimum required eligible liabilities (MREL, a regulatory requirement that European banks are required to meet, which is seen building a cushion that could absorb a financial institution’s losses if it enters resolution) – i.e. to expand their liquidity and their capital bases.
In total, over the course of the year, the four banks will have to issue bonds worth about €3.5 billion, and by 2025 – based on the needs from the MREL exercise – they will have to complete issues totaling more than €15 billion.