Greek bank bonds fall to records as ECB said to review funding

Greek bank bonds fell to records as the European Central Bank was said to be studying measures to rein in funding to the country’s lenders.

National Bank of Greece SA’s 750 million euros ($801 million) of 4.375 percent bonds due April 2019 fell 0.8 cent on the euro to 54.35 cents, according to data compiled by Bloomberg. Piraeus Bank SA’s 5 percent notes due March 2017 fell for an eighth day to 60.73 cents in the longest losing streak since October, the data show.

The ECB is considering restricting Emergency Liquidity Assistance to the banks, as resistance to further aiding the stricken lenders grows among policy makers, people with knowledge of the discussions said. The measures may be considered if Greece’s government fails to convince euro-area finance ministers it can reform its economy and secure much- needed bailout funds, one of the people said.

“The Greek banks are highly dependent on ELA and require additional funding from it as they leak deposits,” said Roger Francis, an analyst at Mizuho International Plc in London. “Any suggestion that ELA is being restricted raises concerns about their viability. Moreover, it’s also a signal that the ECB is getting uneasy about prospects for Greece overall.”

The bonds were among the worst performers in Bank of America Merrill Lynch’s Euro Financial High Yield index.

Credit-default swaps insuring $10 million of Greek debt for five years rose to $5.1 million in advance and $100,000 annually, according to CMA. That signals an 80 percent probability of default, compared with 84 percent Monday.


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